Family Office Definition: Generation-Skipping Transfer Tax
Generation-Skipping Transfer Tax definition: Assets transferred to generations two or more below the deceased person are subject to additional taxes if the amount exceeds the allowable exemption. For example, grandchildren are two generations below, but the rule applies to any non-spouse at least 37.5 years younger than the deceased (whether a family member or not). The transfer may occur in the form of a gift while the grantor is living or after death. Trusts are also subject to the GST tax. The amount of the tax is typically the highest federal estate tax rate, but it is a separate tax in addition to estate taxes. The exemption is not automatically given; it must be claimed by the executor filing estate taxes.
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