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The U.S. generation-skipping transfer tax (a.k.a. "GST tax") imposes a tax on both outright gifts and transfers in trust to or for the benefit of unrelated persons who are more than 37.5 years younger than the donor or to related persons more than one generation younger than the donor, such as grandchildren. [1]
A generation-skipping trust lets you avoid that middle round of taxes. But be aware that if assets in a generation-skipping trust exceed $14 million, they may themselves be subject to taxes , of ...
A dynasty trust is a trust designed to avoid or minimize estate taxes being applied to family wealth with each subsequent generation. [1] By holding assets in trust and making well-defined (or even no) distributions to beneficiaries at each generation, the assets of the trust are not subject to estate, gift or generation-skipping transfer tax (GST) taxes.
The fiscal year 2014 budget called for returning the estate tax exclusion, the generation-skipping transfer tax and the gift-tax exemption to the 2009 level, $3.5 million, in 2018. [45] The exemption amounts set by the Tax Cuts and Jobs Act of 2017 , $11,180,000 for 2018 and $11,400,000 for 2019 again have a sunset and will expire 12/31/2025
The generation-skipping tax could apply and if so, you’d be subject to the highest applicable federal estate tax rate. Establishing a generation-skipping trust is one way to get around that.
Also called the generation-skipping tax, this federal tax … Continue reading → The post What Is the Generation-Skipping Transfer Tax? appeared first on SmartAsset Blog.