Generation-Skipping Transfer

Transfer of financial assets or property to a recipient more than a single generation removed from the transferor, such as from a grandfather to a grandchild. May be subject to the generation-skipping tax.

A transfer that passes over one generation in favor of a younger generation. For example, a transfer by a grandfather to a grandchild would constitute a generation skipping transfer since it skips the grandchild's parent. A generation skipping trust is a trust created in order to make a generation skipping transfer. Certain generation skipping transfers made by a generation skipping trust or its equivalent may avoid the estate or the gift tax, but are nonetheless subject to the generation skipping transfer tax. I.R.C. §§2601 et seq.