SKIP PERSON

Summary

A skip person is someone who is at least two generations younger than the person making a transfer (the transferor). This concept is crucial in estate and gift tax law because transfers to skip persons may trigger the Generation-Skipping Transfer (GST) tax. The most common examples are grandchildren and great-grandchildren when the transferor is a grandparent or great-grandparent. The term 'skip' refers to skipping over the intervening generation (like the transferor's children) when making transfers.

Usage Context

Understanding skip persons is essential when studying estate planning, gift and estate taxation, and Generation-Skipping Transfer tax rules. This knowledge is critical for calculating potential tax liabilities and planning strategies to minimize GST tax exposure.

Common Confusions

• Thinking that only blood relatives can be skip persons (adopted children and step-children can also qualify)
• Assuming all transfers to skip persons automatically trigger GST tax (exemptions and exclusions may apply)
• Confusing generation levels when multiple marriages or adoptions are involved
• Not understanding that the transferor's generation is the reference point for determining skip person status