Legal Blog
The Weekly Scenario: Generation-Skipping Transfer Tax
Question: What is the generation-skipping transfer tax?
Answer: The generation-skipping transfer tax is designed to ensure that a transfer tax is paid at each generational level. In the early days of the federal estate tax, the wealthiest Americans devised a method to effectively be taxed every other generation. Essentially, a patriarch and matriarch would leave their estate to their grandchildren (instead of children), thereby avoiding tax for an ‘extra’ generation. This plan could continue down the line. Over time, wealthy clients then began leaving their assets in long-term trusts to benefit multiple generations and thereby escaping taxation at each generational level.
As with the estate and gift tax exemptions, the generation-skipping tax exemption is also $11.58 million per person in 2020. However, while the estate tax exemption has been made portable between married couples, the generation-skipping transfer tax exemption has not.
As always, if you have any questions or would like to learn more, please contact Steve Shane at sshane@offitkurman.com or .
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
ABOUT OFFIT KURMAN
Offit Kurman is one of the fastest-growing full-service law firms in the United States. With 14 offices in seven states, and the District of Columbia, and growing by 50% in two years through expansions in New York City and Charlotte, North Carolina, Offit Kurman is well-positioned to meet the legal needs of dynamic businesses and the individuals who own and operate them. For over 30 years, we’ve represented privately held companies and families of wealth throughout their business life cycles.
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