Generation Skipping Study Guide

Generation Skipping Study Guide - Generation Skipping...

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Generation Skipping Transfer Tax The federal generation-skipping transfer tax ("GST tax") is a tax imposed on generation-skipping transfers made by individuals during their lifetime or at their death. The GST tax applies to transfers by nonresident aliens that are subject to the federal estate or gift tax. The GST tax is imposed in addition to the estate tax or gift tax. It is important to understand who a skip person is because only transfers to skip persons are subject to the GST tax. A "skip person" is a natural person assigned to a generation that is two or more generations below the generation assignment of the transferor. A trust may be a "skip person" if either (1) all interests in the trust are held by skip persons or (2) no person holds an interest in the trust and no distributions, other than a distribution whose probability of occurring is so remote as to be negligible (including distributions at the termination of the trust) may be made after the transfer to a person other than a skip person. The generation assignment of an individual who is a lineal descendant of a grandparent of a transferor is determined by subtracting the number of generations between the grandparent and the individual from the number of generations between the grandparent and the transferor. The generation assignment of an individual who is a lineal descendant of a grandparent of the transferor's spouse (or former spouse) is determined by subtracting the number of generations between the grandparent and the individual from the number of generations between the grandparent and the transferor's spouse (or former spouse). An individual who has been married to the transferor at any time is assigned to the transferor's generation. An individual who is not assigned a generation by any of the foregoing rules is assigned to the a generation based on the date of the individual's birth. An individual will be treated as if the individual were a member of the generation that is one generation below the transferor's generation or, if lower, the generation assignment of the youngest living ancestor of the individual who also is a descendant of the parent of the transferor (or the transferor's spouse or former spouse) if the individual is a descendant of a parent of the transferor (or the transferor's spouse or former spouse) and the individual's parent who is a lineal descendant of the parent of the transferor (or the transferor's spouse or former spouse) is dead at the time that the transfer is subject to gift or estate tax imposed on the transferor. This special generation-assignment rule does not apply to an individual who is not a lineal descendant of the transferor (or the transferor's spouse or former spouse) if, at the time of the transfer, the transferor has any living lineal descendant. A person has an interest in property held in trust if either (1) the person has a right (other than a future right) to receive trust
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Generation Skipping Study Guide - Generation Skipping...

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