Generation Skipping Transfer: Trusts and Taxes

I.  Overview of the Generation-Skipping Transfer Tax

  1. Reason behind the GST Tax.  The federal generation-skipping transfer (“GST”) tax is primarily designed to prevent the tax-free transfer of wealth from a grandparent to his grandchild or great-grandchild. Prior to the advent of the GST tax, families could avoid the death tax that is imposed upon each generation by skipping a generation or two on at least a portion of the wealth. 
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