Generation Skipping Transfer Tax

[niyati]

Can someone explain what the Generation-Skipping Transfer Tax is and when it applies intax?

 

[jainnorton]

The Generation-Skipping Transfer Tax (GSTT) is a federal tax on gifts/inheritances skipping a generation (e.g., grandparent to grandchild). It applies when transfers exceed the lifetime exemption ($13.61M in 2024).

 

[maria]

Generation-skipping transfer tax refers to a federal tax on either a gift or an inheritance that avoids the ability of a donor to not pay any estate taxes by neglecting the children to target the grandchildren. In the case of generation-skipping transfer tax, the grandchildren do not get any more than they would get under an inheritance coming directly via parents.

 

[ankita]

The term "generation-skipping transfer tax" describes a federal tax on a gift or inheritance that targets the grandchildren rather than the children, so preventing the donor from avoiding paying any estate taxes. The grandchildren do not get any more than they would if their parents had left them an inheritance in the event of a generation-skipping transfer tax.

 

[Samuel]

A federal tax on a gift or inheritance that targets the grandchildren rather than the children, so prohibiting the donor from evading paying any estate taxes, is referred to as "generation-skipping transfer tax". In the event of a generation-skipping transfer tax, the grandchildren receive the same amount as if their parents had given them an inheritance.