Introducing a New Series - Basics of Generation-Skipping Transfer Tax
A course on a tax that many practitioners misunderstand
In my experience as an estate planner, one of the most misunderstood taxes is the generation-skipping transfer (GST) tax. I have observed a number of tax preparers, attorneys, and wealth advisors with significant blind spots when it comes to the proper application and reporting of the GST tax exemption or (on occasion) GST tax liability itself.
However, I have observed a dearth of resources out there, or at least relatable resources, on the GST tax. As a practitioner, I had to self-teach myself the GST tax, in part by teaching it as part of the estate planning module of the CFP prep program and in part by reviewing trusts and gift tax returns.
So, I set out to create a course on the basics of GST tax, because it is what I needed and did not have when I was new to the practice of law.
Now, I realize there are tons of resources out there on the advanced nuances and minutia of the GST tax, but getting there requires a knowledge and foundation that many people lack. And, my hope is to one day have a course that is comprehensive enough to train any new estate planner in any private wealth discipline (be it law, tax reporting, trust services, financial services, or even family counseling/coaching) either in-person or online, and this GST course is designed to serve as a (free) beta test for a small portion of what will eventually be a (paid) comprehensive course.
As a reader, you may feel that you have intermediate or advanced knowledge in GST tax, and that is OK. I am not asking you to listen if you do not wish to invest the time. However, if you have employees who could benefit, or if you know peers who need training resources (for themselves or their own employees), I would be grateful if you could share this course or particular installments. And, if you would like to listen and provide feedback, I would be grateful for your input.
So, without further adieu, here are the first two installments:
Part I: Purpose, Effects, and Definitions
In this first installment, I present the “why” behind the GST tax, and provide a quick illustration (not for mastery but by means of foreshadowing) of how the tax is calculated.
I also introduce two core themes - (1) knowledge of key terms and their respective definitions is half the battle, and (2) GST tax always tracks estate or gift tax. GST tax is definition-driven, with many unfamiliar terms such as transferor, skip person, non-skip person, direct skip, taxable distribution, taxable termination, ETIP, reverse QTIP election, GST trust, constructive addition, etc. While this Part I does not define these terms, it does introduce them and emphasize their importance.
Part II: Identifying the Transferor and Skip Person
IRC Section 2601 applies the GST tax wherever there is a “generation-skipping transfer.” This term itself is later defined and broken into subcategories and exceptions, but before exploring these subcategories, one must understand the parties involved in a generation-skipping transfer - a transferor and a skip person.
In this Part II, I dive into the definition and identification of each party, along with some of the nuances and exceptions that apply when determining each party with respect to a transfer (or deemed transfer) of any particular assets or property.
Interested in More?
As I publish parts of this series, you can either subscribe to this newsletter, to my YouTube channel, or to my Linkedin feed to get updates. However, even if you follow me on Linkedin, the algorithm tends to supress any content I post that links to a video or this newsletter, so I would encourage you to follow me outside of Linkedin.
If you prefer not to subscribe, I would still like to know more about you even if you wish to remain anonymous. Each video above has a short viewer survey in the video notes, and if you would please do me the favor of filling this out (again, you can remain anonymous), that will help me get a sense of who is watching and what you would like to learn about.
Thank you as always for reading, and please do not hesitate to reach out to let me know how I can better serve your educational needs.