What is the generation-skipping tax and should I worry about it?
The generation-skipping tax is a tax in addition to gift and estate taxes. The tax is imposed on transfers that Askip@ generations. The generation-skipping tax laws are very complex. Each individual may exempt $2,000,000 from this tax. A typical generationskipping transfer would be as follows: a trust is created by an individual which provides the individual’s son with income and upon the son’s death the trust property passes to the grandchildren. The trust property is not subject to tax in the son’s estate, thus “skipping” a generation level of estate taxes. The tax also applies to a direct transfer of property froman individual to his or her grandchildren.
