A steep flat tax on assets that "skip" a generation and are left directly to or in trust for grandchildren and even younger generations. The rate of tax is the then applicable maximum estate tax rate which used to be 55% and is gradually decreasing to 35% in 2010. But, in 2011 it springs back to 55%. Everyone has an exemption from this tax. Prior to 1999, the exemption was $1,000,000. It was increased to $1,010,000 in 1999, $1,030,000 in 2000, 1,060,000 in 2001 and $1,100,000 in 2002. It is now $1,200,000 and is also tied to inflation.
A flat 55 percent federal tax levied on any transfers (either during lifetime or at death) made to beneficiaries or others at least two generations below the transferor.
a tax enacted by Congress to eliminate the ability of estate owners to avoid estate taxes by skipping a generation of heirs; scheduled to be repealed for one year in 2010
A transfer tax levied on gifts or inheritances to individuals at least two generations younger than the person making the transfer.
A federal tax on transfers of property made to a family member who is more than one generation below the donor, that occur either during life as a gift or at death by will or bequest.
An extra tax imposed on gifts or on-death transfers that would otherwise escape estate or gift tax. Example: A gift from a grandfather to a granddaughter skips a generation, and thus might be subject to this tax.
A transfer tax generally assessed on gifts in excess of $1 million to grandchildren, great-grandchildren, or others at least two generations below the donor.
A special tax assessed on transfers to anyone two generations or more below the Grantor such as grandchildren and great grandchildren. This may apply to younger non-relatives as well. There is a $1,060,000 exemption for 2001, indexed for inflation for subsequent years.
Generation-skipping Trust
A federal tax that applies to transfers in generation-skipping trusts and to direct gifts between the transferor and a person in a generation at least two below the transferor's.
An extra tax on gifts or on-death transfers of money or property that would otherwise escape the once-per-generation transfer taxes that apply to gifts and estates. For example: a gift from a grandfather to a granddaughter skips a generation and might be subject to this tax.
Generally, a tax assessed on transfers in excess of $1 million to grandchildren, great-grandchildren, and certain other individuals two generations below the donor. When a trust is used, this $1 million exemption must be allocated very carefully if the entire value of a trust is to remain exempt. One million dollars was the exemption amount per individual in 1998 and is indexed for inflation.
A transfer tax generally assessed on gifts in excess of $2 million to grandchildren, great-grandchildren or others at least two generations below the individual making the gift. It is a flat tax computed with reference to the minimum federal estate tax applicable at the time of the transfer, which is currently 46 percent. There may also be a state generation-skipping transfer tax.
