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trust are held by skip persons. Secs. 2613(a)(1) and (2), 2651.
In the case of a direct skip (other than a direct skip from
a trust), liability for GST tax falls on the transferor. Sec.
2603(a)(3). The term “transferor” means the decedent in the case
of any property subject to Federal estate tax. Sec. 2652(a)(1).
The flush language of section 2652(a)(1) provides that “An
individual shall be treated as transferring any property with
respect to which such individual is the transferor.”
As a general rule, if a decedent holds a general power of
appointment over property at death, the value of such property is
included in the decedent’s gross estate for Federal estate tax
purposes under section 2041. With exceptions not pertinent to
our discussion, a general power of appointment means “a power
which is exercisable in favor of the decedent, his estate, his
creditors, or the creditors of his estate”. Sec. 2041(b)(1).3
GST tax generally applies to any generation-skipping
transfer made after October 22, 1986. TRA 1986 sec. 1431(a).
However, TRA 1986 section 1433(b)(2)(A) provides special
transitional rules or “grandfather” provisions excepting certain
transfers from the reach of the GST tax. TRA 1986 section
1433(b)(2)(A) provides:
3 It follows that a decedent who dies holding a general
power of appointment over property is treated as the transferor
of that property for purposes of GST tax. See 5 Bittker &
Lokken, Federal Taxation of Income, Estates & Gifts, par. 133.2.2
at 133-6 to 133-7 (2d ed. 1993).
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Last modified: May 25, 2011