GST applies when transfers are made directly to members of younger generations (effectively "skipping" a generation), when distributions are made from trusts to members of younger generations and when an interest in property of an older generation terminates in favor of a younger generation. The most common instance involving GST is where a grandparent leaves an inheritance directly to a grandchild and the grandparent is still living. However, the parties do not need to be related for there to exist a GST liability. If the beneficiary of the gift or estate is 37.5 years younger than the donor (or deceased) the transfer may be subject to GST. The exemption amount is, and will be the same as the estate tax exemption amount for 2008 through 2011.
When the estate tax is repealed in 2010, the generation-skipping tax will also disappear. Until 2010, the exemption amount will be the same as the estate tax exemption amount (indicated above). In 2008 and 2009, the GST tax rate is 45% and when it is restored in 2011, the rate will be 55%.
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The Santa Monica, California Law Offices of Robert ML Baker III represents clients throughout Los Angeles County, including the cities of West Hollywood, Westwood, Beverly Hills, Culver City, Malibu, Encino, Marina Del Rey, West Los Angeles (West LA), Santa Monica, Venice, Los Angeles, Sherman Oaks and the South Bay.
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