Generation-skipping transfer (GST) tax is a federal tax imposed on transfers to beneficiaries more than one generation below the transferor, or to certain trusts for their benefit. It applies to direct skips, taxable distributions, and taxable terminations, generally at the top estate-tax rate.Careful use of GST exemption and trust design can eliminate or reduce GST on appreciating assets.

Advisors educate families on direct skips, taxable distributions, and taxable terminations, thendesign trusts and allocations to prevent GST exposure on appreciating assets.