What is a generation-skipping transfer tax?
A generation-skipping transfer tax is a tax imposed by the state of Florida on the transfer of property from one generation to another. The tax applies to transfers between grandparents and grandchildren, or any other transfers that skip a generation. For example, if a grandparent transfers property or assets to their grandchild, the transfer is subject to this tax. The tax rate for a generation-skipping transfer tax is imposed on the value of the property being transferred, and the amount that is taxed depends on the type of transfer. Generally, it is higher than the rate for a gift tax or estate tax. For transfers to individuals other than the grandchild or lineal descendants, the rate is currently the highest federal tax rate (37%). The purpose of a generation-skipping transfer tax is to prevent wealthy individuals from avoiding estate taxes by transferring money or assets to their grandchildren or other individuals in the same generation. This helps ensure that the state can collect tax on transfers of wealth that would otherwise be avoided. In addition to the tax, the beneficiaries of the generation-skipping transfer may be subject to certain other rules, such as filing an information return and providing certain information about the transfer.
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