Skip Person

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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 ?
2611(a) as a taxable distribution, a taxable termination, or a direct skip, all of which are transfers to or for the benefit of one or more skip persons.
Trusts for the benefit of skip persons are treated as skip persons when all beneficiaries eligible or entitled to receive trust income or principal are skip persons, or no person is currently eligible or entitled to receive trust income or principal, and at no time may distributions be made to beneficiaries who are not skip persons.
Under current law, the GST exemption permits a donor to transfer a total of $5,120,000 (in 2012) to skip persons free of GST tax (IRC sections 2631 [c] and 2010[c]; Treasury Regulations section 26.
If upon the termination of an interest in a trust by reason of the death of a lineal descendant of the transferor, a portion of the trust is distributed to skip persons (or to trusts for such persons), such partial termination is treated as taxable.
The attorney must consider not only biological grandchildren, or individuals inherently skip persons, but also beneficiaries who are otherwise skip persons because of ages.
Where insurance proceeds held by an insurance company are to be paid to skip persons in a direct skip at death (a direct skip can occur whether proceeds are paid in a lump sum or over a period of time) and the aggregate value of such proceeds held by the company is less than $250,000, the executor is responsible for filing and paying the GST tax; consequently, the insurance company can pay out the proceeds without regard to the GST tax (apparently, the insurance company could not do so if the executor attempts to recover
1) Because grandchildren are two or more generations below the grandparent (transferor), they are known as skip persons, whereas children are known as nonskip persons (the transferor's spouse is also a nonskip person, since she is of the same generation as the transferor).
Here, servicemembers should allocate their GST exemption in order to produce a "dynasty trust" (123) with an "inclusion ratio" (124) of zero and thus an effective tax rate of zero, for the exclusive benefit of skip persons (e.
Direct skips are transfers-by gift or at death-to one or more skip persons.
And, as discussed below, certain transfers from trusts to skip persons are subject to the GST tax.
Such persons who are two or more generations below that of the transferor are defined as skip persons.
The first, a "direct skip," is a gift or bequest to a skip person or a trust that benefits only skip persons.