Generation-Skipping Transfer Tax and Post-Mortem Planning: Tax Rules, Allocations, Formula Drafting, Key Challenges

A solid foundation in the GST tax regime of Section 2632 and following statutes is critical to successful multi-generational gift tax planning and compliance. Estate planners must grasp skip-person transferees and gifts that will trigger GST tax, the "inclusion ratio" rules to calculate the tax cost of GSTs, and formula drafting.

Estate planners should utilize all available mechanisms, such as gifting, trusts, and other transfer methods. GST tax planning can assist in limiting or avoiding gift and estate taxes. Reducing the estate and gift tax exemption will impact taxpayers wishing to leave substantial amounts to grandchildren or trusts that will eventually pass to grandchildren.

The amount of the exemption from the federal GST tax is currently equal and tied to the amount of the estate and gift tax exemption. Therefore, any reduction in the estate and gift tax exemption will likewise reduce the GST tax exemption. Section 2642 provides the framework for determining the taxable portion of any GST under GST tax.

Furthermore, special rules apply to inclusion ratios and applicable fraction formulas, depending on the type of trust receiving a GST. To avoid costly tax consequences, estate planning counsel and advisers need to be constantly aware of the impact of these rules on transfers subject to the GST rules.

Listen as our experienced panel provides a deep and practical guide to applicable GST rules and methods for utilizing those rules to the advantage of clients, allocations, formula drafting, and more.

1. GST transfer tax and allocations
2. GST severance rules and late allocation rules
3. IRC 2642 structure
4. Calculation of inclusion ratio
5. Planning implication of pre-transfer inclusion ratio and fraction calculations
6. Trusts; preserving asset basis and other tax attributes

The panel will review these and other important topics:

• How can GST tax planning assist clients under current tax law and in anticipation of tax law changes?
• How do you spot trusts with an inclusion ratio greater than zero?
• What is the interrelation between the inclusion ratio and an applicable fraction under Section 2642 and its regulations?
• How can trust division or modifications be used to preserve asset basis?

Learning Objectives

After completing this course, you will be able to:

• Understand how GST tax planning assists clients under current tax law and in anticipation of tax law changes
• Ascertain how to spot trusts with an inclusion ratio greater than zero
• Recognize the interrelation between inclusion ratio and an applicable fraction under Section 2642 and its regulations
• Understand the special rules for CLATs and other types of trusts in calculating the inclusion ratio and imposition of GST tax

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate and gift taxation and reporting, pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.