What Is the Generation Skipping Tax Exemption for 2020?
Understanding Generation-Skipping Transfer Tax (GSTT) The generation-skipping transfer tax (GSTT) is an additional tax on a transfer of property that skips a generation. The GSTT was implemented to prevent families from avoiding the estate tax for one or more generations by making gifts or bequests directly to grandchildren or…
Who is eligible for a generation skipping transfer?
Any individual is eligible to receive a generation-skipping transfer as long as they are at least 37½ years younger than the transferor. The generation-skipping transfer tax is imposed only if the transfer avoids incurring a gift or estate tax at each generation level.
What is the current tax rate for generation skipping trusts?
The tax rate remains 40% under current (post-TCJA) law. Individuals who wish to leave their wealth to their grandchildren may allocate their GST exemption to generation-skipping trusts for their benefit. Such trusts will be funded with cash or property worth up to the available GST exemption.
