How you can avoid a huge tax trap – Beware of the generation-skipping tax

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Abstract: Those planning their estate shouldn’t overlook the generation-skipping transfer (GST) tax. Despite a generous, $5.43 million GST exemption, complexities surrounding its allocation create several tax traps for the unwary, such as a 40% tax on transfers to “skip persons,” including grandchildren, family members more than a generation younger, and nonfamily members more than 37½ years younger, among other things.