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Name and describe two characteristics of a termination of an interest in property held in trust...

Name and describe two characteristics of a termination of an interest in property held in trust that does not create a taxable termination.

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Answer #1

Two characteristics of a termination of an interest in property held in trust that does not create a taxable termination are:

1. When at the termination the transfer is subject to federal estate or gift tax. In this case GSTT (i.e. Generation Skipping Transfer Tax) will not apply as the transfer is being subjected to gift tax/estate tax.   

2. When at the termination a non-skip person has an interest in the property - A skip person is a natural person who is two or more generations younger than the transferor. When a non-skip person has an interest in the property then GSTT will not apply.

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