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

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

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

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

Josh Nelson, and his staff, have been amazingly helpful to our family. The ins and outs of nursing homes, the rules and regulations that govern Medicare and Medicaid are daunting and the folks at Nelson Elder Care Law have been informative, responsive, and above all, empathetic. I cannot emphasize enough how their service has taken a weight off of our shoulders especially during a world pandemic that has targeted nursing homes across our country. I highly recommend retaining Josh and his firm!

- Marcia

I had a simple legal question to them that I needed answered and they very helpful in giving me the information I needed. I highly recommend them and will reach out to them if I need more advice or assistance. Thank you for taking your time to just answer a couple of questions I had!

- Ben