Generation-Skipping Transfer Tax (GSTT) is a tax on transfers of assets to persons who are two or more generations removed from the individual making the gift or bequest. This tax is in addition to any estate taxes that may be due on the property in question. The tax rate is equal to the maximum federal estate tax rate in effect.

 

ABC Trusts can maximize the effectiveness of generation-skipping transfers at death. An ABC trust is comprised of the following components:

• Trust A
• Trust B
• Trust C

   

Trust A uses the marital deduction. Trust B is part of the generation-skipping transfer up to the equivalent amount of the applicable credit. Trust C (also known as a Reverse QTIP Trust) reverses the GSTT exemption to be used by the estate of the first to die

Trust B (ABC Trusts) | Trust C (ABC Trusts) | ABC Trusts for Generation-Skipping (Illustration) | Trust A (ABC Trusts)

 

 

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