Applicable Exemption Amount

Every individual is entitled to a GSTT exemption as transferor. Married couples that make a lifetime gift and elect gift splitting will be deemed to have made one-half of the gift, and each will be entitled to an exemption. For 2010,the GSTT is repealed, unless Congress makes changes to reinstate it.

Like other changes made by EGTRRA in 2001, the GSTT that is repealed in 2010 is reinstated in 2011. Prudence suggests that all GSTT planning be conducted in light or current law, which means the GSTT, like the gift and estate tax, returns to its 2001 form in 2011 with a $1 million exemption.

Predeceased Parent Exception

If the transfer of property is made to a skip person because there's no one in between, no "skip" is presumed to occur and therefore no GST tax is owed. For example, if the transferor's child — the grandchild's parent — is deceased at the time of the transfer, the transaction is treated as a regular gift or estate transfer from the transferor to the grandchild.