This is a federal tax levied against gifts and transfers in the trust itself. Whether during a lifetime or at the death, it is for beneficiaries that are two or more generations younger than the donor. This might include family members such as grandchildren that exceed the GST tax exemption. The GST tax is a tax applied to transfers that would have otherwise avoided gift or estate tax at the skipped generation levels. The generation-skipping transfer tax is only applied in certain states.

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