Leaving things to much younger relatives? Here is some information to help you understand the terms.
Generation Skipping Transfer: A transfer of property, whether during life or at death and whether outright or in trust, to an individual (eg, a grandchild) who is two or more generations younger than the donor.
Generation Skipping Transfer TAx ("GST TAX")
A tax levied on all generation skipping transfers to the extent that the cumulative value of all such transfers exceeds the generation skipping transfer tax exemption amount, currently $5.4 million. Decedent's generation skipping transfer tax information is reported on Schedule R: Generation-Skipping Transfer Tax of decedent's federal estate tax return (Form 706).
Generation Skipping Trust
Any trust having a beneficiary who is two or more generations younger than the trustor.
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