Generation-Skipping Transfer Tax Calculator

The GST tax is a 40% tax on transfers (gift or bequest) to a "skip person" - typically a grandchild or anyone more than 2 generations below the donor. It exists to prevent wealthy families from skipping a generation of estate tax. The GST tax is in ADDITION to any gift or estate tax owed, so an unprotected transfer to a grandchild could be hit with both 40% gift/estate tax AND 40% GST = 64% effective tax.

For related individuals: anyone 2 or more generations below the donor (grandchild, great-grandchild, great-niece/nephew). For unrelated individuals: anyone more than 37.5 years younger than the donor. A trust counts as a skip person if all current beneficiaries are skip persons. Spouses are never skip persons regardless of age difference. A "deceased parent" exception: if the parent generation is already deceased, the grandchild moves up to become a non-skip person.

Every individual has a lifetime GST exemption equal to the estate tax exemption (~$7M in 2026 post-TCJA-sunset). Properly allocating the exemption to a transfer makes the "inclusion ratio" zero - so the GST tax = $0. Automatic allocation rules cover most direct transfers, but trusts and indirect skips often require explicit allocation on Form 709. Mis-allocation is one of the most common (and expensive) estate-planning mistakes.

A Dynasty Trust is a trust designed to last for generations - typically the longest period permitted by state law, which is forever in states that have abolished the Rule Against Perpetuities (SD, NV, DE, AK, others). By funding it with GST exemption, all assets and growth stay GST-tax-free indefinitely. This is one of the most powerful intergenerational wealth-transfer strategies available.