Generation-skipping transfer tax

The generation skipping transfer tax is a transfer tax imposed at a rate equal to the highest estate tax rate (currently 40%) on gifts or estate transfers where the transferred assets pass, or will pass, to recipients two or more generations below the donor, without being subject to the imposition of estate tax at the intervening generations. Each donor currently has a generation skipping transfer tax exemption of $5,250,000, subsequently indexed to inflation.