Grandmother G transferred assets in trust, the life interest payable to her daughter D, with the trust assets passing to her only grandchild GC upon D's death.If D dies in the current year, and the value of the property in trust of the time of her death is $5 million, what is the amount of the generation-skipping transfer tax imposed on the transfer?

Question

Quizplus · Accepted Answer

The generation-skipping transfer tax (GSTT) is imposed on transfers to individuals two or more generations below the transferor. However, the GSTT is not imposed until the property actually transfers to the grandchild (GC). Since the property was in trust with the daughter (D) having a life interest and it only passes to the grandchild (GC) upon D's death, the tax would be calculated and imposed at the time of the transfer to GC, not at the time of D's death. Additionally, there are exemptions and exclusions that could apply, potentially reducing the tax to $0, depending on the specifics of the trust and tax law at the time of transfer.

Grandmother G Transferred Assets in Trust, the Life Interest Payable