Generation-Skipping Transfer (GST) Tax

Definition

The generation-skipping transfer tax is a federal tax imposed on transfers of wealth to beneficiaries who are more than one generation below the donor, such as grandchildren, intended to prevent families from avoiding estate tax by skipping a generation. It applies to direct gifts, trusts, and inheritances that bypass an intermediate generation. The GST tax exemption is unified with the federal estate and gift tax exemption under current law.