Skip Person

Skip Person

The transfer of a property to a person two or more generations younger than the person making the transfer. This may trigger a taxable event.
References in periodicals archive ?
Non-skip person: Any person or trust that is not a skip person,
If a trust that is a skip person is created in 2010 and the only transfers to it are made in that year, it is easy to apply the rules.
So, for example, if you had a pot trust that was not GST-exempt but could make distributions to a grandchild or other skip person, a lot of clients or trustees would have made those distributions to grandchildren to shift assets out, because even if it was a GST transfer, there was no GST tax.
If the donee is not related to the donor, the individual is not a skip person if he or she is not more than 37 1/2 years younger than the donor.
Thus a grandchild who might be a skip person to his or her grandparent will not be treated as a skip person if his or her parent dies before the grandparent.
13 interest in the trust, then the trust is not a skip person.
A skip person for these purposes is anyone assigned to a generation more than one generation below that of the transferor (donor or decedent).
The GST tax on direct skips is computed by multiplying the applicable tax rate times the inclusion ratio and then multiplying this amount times the "net amount" received by the skip person.
If an outright gift to a skip person qualifies for the annual exclusion, the GST tax does not apply to that gift.
1001 to apply to situations in which one of the resulting trusts from a qualified severance is a skip person and in which a trust beneficiary is granted a contingent testamentary GPOA that is dependent on a trust's inclusion ratio.
If a gift is made to a skip person,[9] any unused portion of the individual's GST tax exemption is automatically allocated to the transferred property.
2613(a)(2), a trust can also be a skip person, if all of the trust interests are held by such persons.