There are taxes on asset transfers in the United States. One of them is the generation-skipping transfer tax. This tax could potentially be levied on asset transfers to relatives who are more than one generation younger than you. It can also be imposed on transfers to people who are not relatives who are at least 37.5 years younger than you are.
This tax is applicable on direct transfers, but it can also be a factor when you are creating a trust for the benefit of someone who is more than one generation younger than you.
Federal Estate Tax
In addition to the generation-skipping transfer tax, there is also a federal estate tax. At the time of this writing in 2014 the exact amount of the estate tax exclusion is $5.34 million. This is the amount that can be transferred to others before the estate tax would be applicable. The maximum rate of the tax is 40 percent.
Federal Gift Tax
The federal estate tax is unified with the federal gift tax. The $5.34 million exclusion applies to taxable gifts that you give while you are living along with the value of your estate. The top rate of the gift tax is also 40 percent.
Generation-Skipping Transfer Tax
The $5.34 million exclusion also extends to the generation-skipping transfer tax, and this tax carries the same 40 percent maximum rate.
Learn More About Transfer Taxes
In this post we have provided a few facts about the generation-skipping transfer tax and the other federal transfer taxes. If you would like to learn more about these taxes, tax efficiency strategies, and other estate planning matters, attend one of our upcoming seminars.
We have scheduled a number of seminars that will be taking place during the months to come. The seminars will cover various different estate planning and elder law topics, and you will have an opportunity to ask any questions that you may have. After the seminars, you can also schedule a free consultation with our firm.
Though these seminars are being offered on a complimentary basis, space is limited, so we do ask that you register for the seminar that you would like to attend in advance.
Refreshments will be served during the evening seminars, and we will be serving a light breakfast during the morning sessions. We urge you to look through the entire seminar schedule to find the information session that fits into your schedule. You can see the list of upcoming seminars on this page: Free Estate Planning Seminars.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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