The New Tax Act.

The 2010 Tax Relief Act (New Tax Act) created a rare opportunity to transfer wealth to grandchildren and more remote descendants. Unfortunately, the New Tax Act was passed on December 17, 2010, not leaving you much time. To take advantage of this opportunity, you must complete your planning by the end of this year.

The Opportunity.

The New Tax Act reinstated the generation skipping transfer tax in 2010—but it pegged the tax rate at 0%.

What Does This Mean for You?

It means you can make a large gift in 2010—in trust or outright—to grandchildren or more remote descendants without having to pay any generation skipping transfer tax (GST tax) and without using any GST tax exemption.

Gifts that exceed your available gift tax exemption would cause gift tax to be payable, but each individual has a $1 million lifetime gift exemption applicable for 2010 (reduced by any amount of such exemption already used). This is a significant benefit that will not be available in 2011.