Exemptions and Exclusions from the GSTT
 

The GSTT Exemption
In 2010, the GSTT was waived and not applicable for property transfers. On Dec. 17, 2010, President Obama signed The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the "Act"). In addition to extending President Bush's income tax cuts, the Act addressed the Estate, Gift and Generation-Skipping Transfer (GSTT) tax laws for tax years 2013 and beyond. Each individual is now given a GSTT lifetime exemption amount of $5 million with an annual inflation adjustment. In 2013, the actual exemption amount is $5,250,000. Unlike the estate and gift tax, the GSTT exemption is not portable between spouses.

Qualifying Annual Exclusion Gifts and Direct Transfers
The annual GSTT exclusion amount is $14,000 (2013) per gift per person.

Example: Harold and Mary have three grandchildren and they would like to gift the maximum amount to each grandchild in 2013. What is the maximum gift before the GSTT will kick in?

Answer: $84,000
Harold can gift $14,000 to each grandchild ($42,000 total), and
Mary can gift $14,000 to each grandchild ($42,000 total).
 

Annual exclusion gifts do not always qualify for the GSTT annual exclusion. Typically, only gifts given "directly" to grandchildren or to a trust for the benefit of a grandchild with a general power of appointment will qualify for the annual exclusion.

If a grandparent decides to pay the premium of a life insurance trust policy through the use of the annual gift (policy is for the benefit of the children and the grandchildren) the payment may not escape the GSTT. Since grandchildren (or more remote descendants) are potential beneficiaries, normally the GSTT exemption would be applied to the gift, but there is always a gray area if the gift is not given directly outright.
 



Sample Questions 1 - 4

Related Articles
  1. Taxes

    What Are Gift Taxes?

    If you're not sure what gift taxes are, read on and we'll explain.
  2. Financial Advisor

    How to Gift Your Way to Lower Estate Taxes

    Estate planning is not just for inheritance. High net-worth individuals, who plan properly, can gift their money and save on taxes.
  3. Retirement

    Estate Planning Law Changes You Need To Know

    When organizing your affairs, you'll need to be aware of tax rates and other regulations.
  4. Retirement

    4 Thoughtful Retirement Gift Ideas for Men

    This"best gifts list" of the most thoughtful retirement gifts for men includes items appropriate as gifts from co-workers, friends or family members.
  5. Personal Finance

    6 Tips For Getting The Most Out Of Gift Cards

    Gift cards are big business, amounting to an estimated $91 billion in annual retail spending. Get the most bang for your gift card buck.
  6. Insights

    Will Your Gift Card Gift Go Unused?

    An unbelievable amount of money gets wasted in the form of non-redemption: nearly $5 billion a year. These tips will ensure that your gift card gift doesn't go to waste.
  7. Personal Finance

    How to Talk to Your Family About Christmas Gift Budgets

    Talking Christmas gift budgets with family members can be hard, but having the talk will help you stay on track financially.
  8. Personal Finance

    How To Get Gift Cards At A Discount

    Use these tips whether you're buying someone a gift or just want to score a discount at your favorite stores.
  9. Personal Finance

    Top Websites For Discounted Gift Cards

    Gift cards can cost less when you buy them through a discount website. Just do the math before you cough up the cash.
  10. Financial Advisor

    A Quick Guide to High-Net-Worth Estate Planning

    A quick estate planning guide for high-net-worth individuals to help minimize taxes and costs, protect assets and plan for care.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center