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transitional rule. Because this conclusion, based partly on the
arcana of the GST tax, may not be immediately obvious, some
background is in order.
The GST tax applies to three forms of transfers (direct
skips, taxable terminations, and taxable distributions) for the
benefit of a “skip person”, defined generally as a person at
least two generations younger than the “transferor”. Secs.
2611(a), 2613. See generally Bittker & Lokken, Federal Taxation
of Income, Estates & Gifts, par. 133.2.1, at s133-2 (Supp. 2006).
For purposes of the GST tax, the “transferor” is the individual
“with respect to whom property was most recently subject to
Federal estate or gift tax.” Sec. 26.2652-1(a)(1), GST Tax Regs.
Pursuant to section 2652(a)(1), “An individual shall be treated
as transferring any property with respect to which such
individual is the transferor.” Thus, a generation-skipping
transfer that is effected through a trust arrangement does not
necessarily occur upon the creation of the trust. Rather, the
generation-skipping transfer occurs when the property passing to
the skip person becomes subject to Federal estate or gift tax
with respect to the transferor.
In the case of property subject to the Federal estate tax,
the “transferor” is the decedent. Sec. 2652(a)(1). Regardless
of who the initial “transferor” of property might have been, if
the property is subsequently included in the gross estate of
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