Our advisors utilize their experience and expertise and that of their colleagues to develop the best solutions for your complex personal and professional financial situations.
Actionable planning strategies to inform and guide your decision-making.
February 1, 2019
Before the Tax Reform Act of 1976, taxpayers attempted to create trusts to successively skip the estates of children and grandchildren, thereby not subjecting the trust assets to federal estate taxes for several generations.
To prevent such skipping, a new tax was created in 1976 called the generation-skipping trust tax. In 1986 that tax was repealed retroactively and replaced by a similar tax called the generation-skipping transfer tax.
The generation-skipping transfer tax may not be imposed by (1) placing the property in a trust that is exempt from the generation-skipping tax or (2) causing the trust property to be taxed in the trust beneficiary’s estate for estate tax purposes, thereby obtaining the exemption from tax of the unified credit amount. The first solution is limited to the amount of the generation-skipping exemption for each donor (approximately $11,400,000 in 2019). The second solution is achieved by giving the beneficiary a general power of appointment over the trust property, that is, a right to give the trust property on the beneficiary’s death to anyone the beneficiary chooses.
Gifts to Generation-Skipping Trusts may be made during lifetime or at death.
The Generation-Skipping Trust often provides as follows:
Cerity Partners maintains an estate planning glossary that further defines many of the terms used in this memo. If The generation-skipping transfer tax may not be imposed by (1) placing the property in a trust that is exempt from the generation-skipping tax or (2) causing the trust property to be taxed in the trust beneficiary’s estate for estate tax purposes, thereby obtaining the exemption from tax of the unified credit amount.you wish to receive a copy of the glossary, please contact your a member of your wealth management team.
Please read important disclosures here.
Judy is a Principal based in the Silicon Valley office. She provides consulting advice for private clients and advisors on estate planning, wealth-transfer strategies, trust...
Partner Paul Chmielewski highlights the gift, estate and GST tax changes for 2024.
Estate planning is crucial for all adults, not just those with taxable estates. From addressing income tax considerations to managing digital assets, estate planning ensures…
Gift and estate tax exemption amounts are may sunset at the end of 2025. For those wary of losing control over significant traditional assets, promissory…
The sale of a business often represents the largest financial event in the business owner’s life. Partner Paul Chmielewski discusses the important pre- and post-sale…
While legal documents provide the structural framework for your estate planning, a compassionate letter of instructions captures the nuances of your personal wishes, ensuring clarity…
Curious about learning more? Let’s talk.
Tell us about yourself and your current financial situation without cost or obligation. Receive an introduction to a wealth management colleague, have a personal conversation, and get your questions answered.