Check the background of this financial professional on FINRA's BrokerCheck.
   

Newsletters


The E-Newsletter articles on this page provide valuable information on timely and interesting financial issues across a variety of subject areas, including retirement, investments, personal finance, annuities, insurance, taxes, college, and government benefits.


Dividend Investing: Small Payments Can Boost Returns
Quiz: Can You Answer These Social Security Benefit Questions?
The College Landscape After Tax Reform
What are the gift and estate tax rules after tax reform?
How has tax reform affected the generation-skipping transfer tax?


SIGN UP NOW
Enter your name and e-mail to receive e-mail updates from me.
NAME:
E-MAIL:


 
 

How has tax reform affected the generation-skipping transfer tax?

The Tax Cuts and Jobs Act, signed into law in December 2017, doubled the federal generation-skipping transfer (GST) tax exemption to $11.18 million in 2018 (adjusted for inflation in later years). After 2025, the exemption is scheduled to revert to its pre-2018 level and be cut approximately in half. Otherwise, the federal GST tax remains the same.

The federal GST tax generally applies if you transfer property to a skip person. A skip person is someone who is two or more generations younger than you (for example, a grandchild). The GST tax may apply in addition to any gift or estate tax. Similar to the gift tax provisions, annual exclusions (up to $15,000 per recipient in 2018) and exclusions for qualifying educational and medical expenses are available for GST tax. You can protect up to $11.18 million (in 2018) with the GST tax exemption. Transfers in excess of the GST tax exemption are generally taxed at 40%.

A GST generally occurs on a transfer that is subject to federal gift or estate tax and made to a skip person, or a transfer to a trust if all the beneficiaries with an interest in the trust are skip persons. A GST may also occur on certain distributions from trusts to skip persons. Additionally, a GST may occur when an interest in a trust terminates, and skip persons then hold all interests in the trust.

Unlike with the gift and estate tax applicable exclusion amount, the GST tax exemption is not portable between spouses. The estate of a deceased spouse cannot transfer any unused GST tax exemption to the surviving spouse.

Note: An early version of the legislation proposed approximately doubling the gift and estate tax basic exclusion amount and the GST tax exemption for 2018 to 2024. After 2024, the estate tax and the GST tax would have been repealed. The gift tax would not have been repealed, although the top gift tax rate would have been reduced from 40% to 35% after 2024. However, the only provision that made it into the final legislation was the doubling of the gift and estate tax basic exclusion amount and the GST tax exemption for 2018 to 2025.

 
©2018 Broadridge Investor Communication Solutions, Inc. All rights reserved.


 
 
 
        


*Securities and Investment Advisory Services offered through Royal Alliance Associates, INC, member FINRA/SIPC.
Insurance services offered through The Monteverde Group, LLC., which is not affiliated with Royal Alliance.  Royal Alliance Associates does not offer tax or legal advice.


Working with an advisor who is a Better Business Bureau member cannot guarantee investment success or that financial goals will be achieved.  Advisors who participate in this program pay a fee for accreditation review/monitoring.  The Better Business Bureau is not affiliated with or endorsed by Royal Alliance associates. 



This site is published for residents of the United States only. Registered Representatives and Investment Advisor Representatives of Royal Alliance Associates, INC may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the Royal Alliance Associates, INC Compliance Department at 212-551-5158.



This communication is strictly intended for individuals residing in the state(s) of FL, IL, IA, KY, MD, MS, MO, NY, NC, OH, PA, SC, TN, TX, VA and WV. No offers may be made or accepted from any resident outside the specific states referenced.
 


Check the background of this financial professional on FINRA's BrokerCheck.