Forbes, Payday for Trust Babies, by Ashlea Ebeling:

How does saving up to $550,000 in taxes on a $1 million payout from your family trust sound? It’s a real opportunity that has corporate trustees and beneficiaries scrambling to review trusts and devise distribution plans by year-end.

“This is an opportunistic time to think about getting money down generations,” says R. Hugh Magill, chief fiduciary officer at Northern Trust in Chicago, who worked with one family and their advisors to set up year-end distributions of $1 million each to four grandchildren, with potential tax savings of $2.2 million. “It’s an opportunity not without risk, due to the possibility of retroactive tax legislation,” he warns.

Thanks to Congress’ inaction on reviving the lapsed estate tax for 2010, there is a one-time opportunity for beneficiaries of certain trusts to get payouts before year-end and avoid big tax bills. That’s because the generation-skipping transfer tax (the “GST” tax), an extra tax on gifts made to grandkids and other “skip” benficiaries, lapsed for 2010 along with the estate tax. On Jan. 1, 2011, the GST tax is set to return with a 55% rate that applies to trusts that are not sheltered from GST tax by a GST exemption. So a $1 million payout from a non-exempt GST trust on Dec. 31 versus Jan. 1 could mean a tax savings of up to $550,000.