Chapter 13 - Generation Skipping Transfers

Question 1

Define Applicable Rate

Answer 1

The maximum estate tax rate in effect at the date of the GST multiplied by the inclusion ratio

Question 2

Define Direct Skip

Answer 2

a transfer of property or an interest in property to a skip person that is subject to estate of gift tax in the hands of the transferor

Question 3

Define Dynasty Trust

Answer 3

Generation-skipping trust created in perpetuity. Once it is created, a dynasty trust provides for trust beneficiaries, but avoids transfer taxation in the beneficiaries’ gross estates by restricting ownership of trust assets.