Estates, Gifts & Trusts
Generation-Skipping Tax (850)
Portfolio Description
Tax Management Portfolio, Generation-Skipping Tax, No. 850, discusses the generation-skipping tax, enacted as Chapter 13 of the Internal Revenue Code by the Tax Reform Act of 1986.
The generation-skipping transfer tax is imposed on transfers, whether outright or in trust, to a transferee who is at least two generations below the transferor's generation. The tax is a flat rate equal to the maximum estate tax rate at the time of the transfer, subject to the allocation of the GST exemption available for each transferor.
The Portfolio explains the background of Chapter 13, key terms, rules for allocating GST exemption, rules for separate shares and trusts, tax computation and liability rules, administration of the tax, and the coordination of the tax with other Code provisions. The Portfolio also discusses the history of the tax and the effective date and transitional rules. Examples are used to illustrate and discuss various issues.
The 2001 Tax Relief Act repealed the generation-skipping transfer tax for generation-skipping transfers made after 2009, although the 2001 version of the tax is reinstated in 2011. After 2003, the GST exemption amount increases in tandem with the estate tax exemption amount and, beginning in 2002, the GST tax rates gradually decrease, making planning more challenging during this transition period.
For additional relevant Tax Management Portfolios, check the "Estates, Gifts and Trusts Portfolio Classification Guide" in the Tax Management Portfolio Index binder.
This Portfolio may be cited as Harrington and Acker, 850 T.M., Generation-Skipping Tax .
Carol A. Harrington, B.S., summa cum laude, University of Illinois; J.D., magna cum laude, University of Illinois Law School; Section of Real Property, Probate and Trust Law, American Bar Association: Section Council, 1992-present, Chair, Committee on Generation-Skipping Transfers: Legislation and Regulations, 1987-1992; Fellow, American College of Trust and Estate Counsel; member, Illinois State Bar Association; member, Trust Law Committee, Chicago Bar Association; co-author, Harrington, Plaine & Zaritsky, Generation-Skipping Transfer Tax, Warren, Gorham & Lamont (1995); contributor to various legal publications on estate planning matters and lecturer at various tax and estate planning institutes.
Frederick G. Acker, B.A., magna cum laude, Valparaiso University; M.A., Harvard University; Fulbright Scholar, University of Manchester, England; J.D., Harvard University Law School; Fellow, American College of Trust and Estate Counsel; member, Committee on Generation-Skipping Transfers: Planning and Drafting, Section of Real Property, Probate and Trust Law, American Bar Association; member, Illinois State Bar Association; contributor to various legal publications on estate planning matters and lecturer at various tax and estate planning institutes.
