Wealth Preservation_Flipbook_2024

Generation-Skipping Transfer Tax The generation-skipping transfer (GST) tax is a tax on transfers of property you make, during life or at death, to individuals who are more than one generation below you — for example, to grandchildren. The GST tax is imposed in addition to (not instead of) the federal gift and estate tax. However, there is a separate inflation-indexed GST tax exemption at the same level as the federal estate and gift tax exclusion. The maximum tax rate is also at the same level. In practice, this means you could give up to $13.61 million ($27.22 million for a married couple) in 2024 to your grandchildren without paying the GST tax, assuming you had not previously used any portion of your GST tax exemption. However, such a gift would also be subject to the lifetime exclusion levels ($13.61 million individual, $27.22 million married couple in 2024) for federal estate and gift taxes. Annual Gift Tax Exclusion In 2024, you can give up to $18,000 ($36,000 for a married couple) in cash or certain types of property — including income-producing stocks and bonds — to as many people as you wish without any gift tax liability. Some gifts are not subject to the annual limit, including gifts to your spouse (as long as he or she is a U.S. citizen), donations to qualifying charitable organizations, and payments of tuition or medical expenses on behalf of another person that are made directly to the educational or medical institution. NOTE: The GST tax is intended to discourage the practice of leaving assets to grandchildren rather than children in an attempt to avoid paying the estate tax twice (i.e., once when left to children and again when passed from children to grandchildren).