Generation-Skipping Transfer Tax Law

The Generation-Skipping Transfer (GST) Tax Law is a tax designed to prevent wealthy individuals from avoiding estate taxes by transferring assets directly to their grandchildren or other descendants who are two or more generations younger, thus "skipping" their children. When such transfers exceed a certain threshold, the GST tax applies in addition to regular estate and gift taxes. This law ensures that wealth is taxed appropriately across generations, maintaining fairness in the distribution of wealth and preventing large tax avoidance strategies through generational skipping.