Beneficial rules for the generation-skipping transfer (GST) tax are currently in force, which may allow you to pass on assets to future generations without a federal tax bill.
GST Tax Basics
When it comes to arranging for gifts and bequests to loved ones, most planning strategies focus on avoiding or minimizing the federal gift and estate taxes. Rightly so. But there's one more piece to the puzzle. It's called the generation skipping transfer tax. The GST tax is intended to snare those who would try to foil the federal gift and estate tax system by transferring wealth to persons more than one generation younger than themselves (typically grandchildren).