Generation Skipping Transfer Taxes

Generation Skipping Transfer Taxes

In part, the federal estate tax is intended to make it, so wealth does not accumulate in one family indefinitely. It may be questionable how well the idea works.  However, the idea is that as property passes down from succeeding generations in a family, the government will take a cut in each generation. People have often found ways around this.

One way around it is by arranging for the inheritance to skip generations within a family. Instead of leaving property to their children, wealthy people would leave it to their grandchildren and even great-grandchildren. Congress did not like this, so it created a tax on these generation-skipping transfers as Wealth Management discusses in “GST Tax Exemptions in Jeopardy.”

However, Congress left open an exemption from these taxes for generation-skipping transfers from irrevocable trusts that were created before Sep. 25, 1986. This created another issue though. If one of those old exempt trusts is modified, it is not always clear whether it continues to be the same trust or whether it should really be viewed as a new trust, which would subject the transfer to the tax. The answer depends on how the IRS decides to rule in most cases.

If you have an old, exempt trust or are the beneficiary or trustee of one, then it is extremely important that you go to a wills and trusts attorney, as soon as you begin to consider modifying the trust in any way. That will allow you to get the best advice about what you should and should not consider doing.

Reference: Wealth Management (May 18, 2018) “GST Tax Exemptions in Jeopardy.”

Hear From Our Clients

“On the threshold of retirement, we finally decided to quit thinking we could self-prepare the requisite documents. We had previously had only a very simple will. We needed the necessary legal (including updated will) & health care docs but didn’t want to deal with the time & complication of legalese. Cindy made the process relatively painless. She took the time to explain and answer questions without trying to upsell services. We were done in 2 meetings plus the reading of emailed drafts. In addition to preparing the documents, Nelson Eldercare will be there when our adult children need advice on executing the plans we’ve put in place.So glad it’s behind us and would recommend Cindy and her helpful staff.”

- Bonnie

Cindy and her company treat their clients like family. Nelson’s offers clear, direct, and honest guidance in planning for your families security and future. No one wants to actively sit down and make these decisions, but Nelson’s makes this process seamless. I was so impressed with their willingness to answer all questions big or small. So glad I made the decision have them help my mom and dad and now me. You can’t go wrong with Nelson’s Elder Care Law.

- Hope

The very best elder law attorney and staff anyone could ever ask for! I have referred a number of clients to Cindy and she never disappoints. She is kind, caring, and extremely thorough in making sure everything is completed as it should be. I highly recommend Cindy for anyone needing lawyer services; she truly goes above and beyond for every client she helps and has had a huge impact in so many peoples’ lives. Thank you, Cindy and staff, for everything that you do- I’m so glad to know you!

- Kerri

I heard Cindy’s presentation at a Senior Luncheon at my church, and was very impressed. She helped my daughter and me understand many aspects of elder law. Josh has also been very helpful in my planning to enter an independent living situation . I have told many friends about them.

- Charlotte

Cindy and the Nelson Elder Care Law team are trustworthy and helpful. They are the experts in elder care law. At Leaf Cremation, we entrust our families to the care of the Nelson team when their services are needed.

- Pierce