DIRECT SKIP

Summary

A direct skip is a type of property transfer in estate planning where assets are given directly from one generation to a person who is at least two generations younger (called a 'skip person'). This bypasses the immediate next generation and may trigger the Generation-Skipping Transfer Tax (GSTT). For example, a grandparent giving property directly to a grandchild instead of to their child first.

Usage Context

Essential for understanding estate planning strategies, tax consequences of intergenerational wealth transfers, and Generation-Skipping Transfer Tax calculations and exemptions.

Common Confusions

• Thinking that any transfer to a younger person is a direct skip
• Confusing direct skips with regular gifts to grandchildren
• Not understanding that the relationship (blood, adoption, marriage) affects skip person status
• Assuming all direct skips have the same tax consequences regardless of amount