IRC Section 2613 defines the concept of a skip person for generation skipping transfer tax purposes. A skip person is generally an individual who is at least two generations below the transferor, such as a grandchild or great grandchild, or a trust in which all interests are held by such individuals or in which no non skip person holds certain interests. This definition is central to identifying which transfers are subject to GST tax, because the tax specifically targets transfers that bypass the generation immediately below the transferor. For life insurance and dynasty trust design, Section 2613 helps determine when naming grandchildren as direct beneficiaries of policies or structuring long term trusts primarily for their benefit creates potential GST exposure that must be managed through exemption allocation, plan design, or different beneficiary structures.

In practical planning, advisors use IRC Section 2613 when mapping family relationships and evaluating proposed beneficiary arrangements. A client might want a large survivorship policy owned by a trust to provide education and opportunity capital for grandchildren. Under Section 2613, those grandchildren are skip persons, so transfers to the trust and later distributions may involve GST consequences. Advisors help clients weigh alternatives such as naming children as primary beneficiaries with limited powers to appoint assets down to grandchildren, or choosing full dynasty planning with deliberate GST exemption allocation. Trustees rely on the skip person definition when classifying distributions, completing tax reporting, and monitoring ongoing compliance. By understanding Section 2613, producers and planners can clearly explain why certain beneficiary choices trigger additional tax considerations and how careful structuring of life insurance funded trusts can minimize unwanted GST exposure while still achieving multigenerational goals.