Question

1.Which of the following gifts could cause a generation skipping transfer tax issue for Mrs. Smith age 90?

a.$200,000 to her grandson, his parents died in an accident.

b.$200,000 to her grandnephew.

c.$200,000 to her sister’s daughter.

d.$200,000 to her friend, age 85.

Answer 1

Answer. a. $200,000 other grandson, his parents died in an accident

Generation skipping transfer tax is applied when a person transfers property to a a generation that is 2 or more than 2 generation younger than the person transferring property and is applied when the property is transferred directly to 2nd generation without being passed onto 1st generation.

In this question, Mrs Smith transferred property to her grandson, without passing property to his son.