Monday, December 27, 2010

Year End Fire Sale on Generation Skipping Transfers for 2010

Grandparents wishing to make gifts to grandchildren have been handed an opportunity by the new 2010 Tax Act to make gifts, directly or in trust, without incurring any Generation Skipping Transfer ("GST") tax in this calendar year. However, a grandparent would still pay 35% gift tax on a grandchild's gifts in excess of the $1 million gift tax exemption. In 2011 and 2012, the tax rate on GST transfers will be 35% with a $5 million exemption.

The decision to pull the trigger on this opportunity is effectively over by Thursday as most financial institutions will be closed on Friday for the New Year Holiday. Anyone who wishes to consider this should contact their tax advisors ASAP.

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