Dictionary of Exit Planning Terms

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Generation-Skipping Tax

In the United States, the generation-skipping tax is imposed on both out right gifts and transfers and trust to or for the benefit of unrelated persons who are more than 37 1/2 years younger than the donor or to related persons more than one generation younger than the donor, such as grandchildren. The generation-skipping tax will be imposed only if the transfer avoids incurring a gift or estate tax at each generation level.

For property distributed in the years 2011 and 2012, taxpayers are entitled to a $5 million GST tax exemption.