|
|
|
|
Generation-Skipping TaxThe GST tax is an additional tax imposed on certain transfers (during your lifetime or at death), either outright or in trust, to a person at least two generations removed from you (the transferor). A simple example is that of a grandparent leaving money to a grandchild where the grandchild’s parent is still alive, and as such leaving out the middle generation. In this case, the grandparent would be considered the transferor, and the grandchild, a skip person, because the transfer “skips” a generation (the grandparent’s own children). GST can also apply in non-family situations where GST may be due if a beneficiary of a gift or estate is 37.5 years younger than the transferor, donor or deceased. As a result of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the GST tax is scheduled for repeal in 2010, but reapplies in its entirety as of 2011. Prior to repeal, rates will be pegged to the top estate tax rate. Being subject to the GST tax (48% in 2004) can potentially undermine an otherwise well-planned estate. Fortunately, every citizen or resident of the U.S. has a $1,500,000 (in 2004) generation-skipping exemption that may be allocated during one's lifetime or upon death. |
|
Send mail to
Webmaster@txcpa.net with
questions or comments about this web site.
|
