Generation-Skipping Transfer Tax (GSTT)
Chapters in this video
- 0:00 The skip-person loophole and two bites of the apple
- 1:09 Granny Gertrude, Paul, and Gatsby: the $10M skip
- 2:35 Double whammy: GSTT stacks on gift and estate tax
- 3:04 Flat 40% rate and the $13.99M exemption
- 4:20 Portability trap: use it or lose it
- 5:34 Direct skips, taxable distributions, taxable terminations
- 6:02 Rapid-fire exam recap
What this video covers
- Why the generation-skipping transfer tax (GSTT) exists and the "two bites of the apple" loophole it closes when a grandparent transfers wealth directly to a grandchild
- Who qualifies as a "skip person" (someone two or more generations below the transferor) and why that designation triggers the tax
- The flat 40% GSTT rate, and why it is not graduated like income tax brackets
- The 2025 GSTT exemption of $13.99 million per individual, and how it stacks against the estate and gift tax exclusion
- Why the GSTT is imposed in addition to (not instead of) the regular gift or estate tax on the same transfer
- The critical portability distinction: estate tax exclusion is portable between spouses via Form 706, but the GSTT exemption is strictly use-it-or-lose-it
- The three ways a transfer triggers GSTT: direct skips, taxable distributions from a trust, and taxable terminations
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