The Version of The Tax Starting in 1986
That approach posed so many administrative problems that in 1986 Congress repealed the 1976 version and enacted a new generation-skipping transfer tax law.
The most recent version of the generation-skipping tax, applicable to estate or gift transfers through December 31, 2009, did not attempt to impose a tax equal to the estate or gift tax that was avoided. Instead, the generation-skipping tax was imposed at a flat rate equal to the highest marginal estate and gift bracket applicable at the time of the gift, bequest, transfer or termination. In 2009, that rate was currently 45%.
In 2009, each taxpayer currently possessed a $3,500,000 exemption from the generation-skipping tax. That meant that only aggregate gifts and bequests to grandchildren or younger beneficiaries in excess of $3,500,000 (potentially $7,000,000 for a married couple acting in concert) would be subject to the generation-skipping transfer tax.
In 2010, like the Federal Estate Tax, the generation-skipping transfer tax was repealed. In some ways, it could be viewed that the exemption is essentially unlimited in 2010 for transfers that would otherwise be subject to the tax. However, the law that created the increases and ultimate repeal of the GST Tax Exemption, expired on December 31, 2010.
For generation-skipping trusts created in the years of 2011 and 2012 and for outright gifts to skip-persons, taxpayers are entitled to a $5 million GST tax exemption.
Read more about this topic: Generation-skipping Transfer Tax
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