Generation-skipping transfer (GST) tax is one of the more nuanced areas of the Internal Revenue Code (the Code), tricking or perplexing clients and their advisers for decades. While the Code grants each taxpayer an exemption from GST tax in the amount of $13.99 million as of Jan. 1, 2025, indexed for inflation, taxpayers may inadvertently elect to allocate this GST exemption when they do not mean to, or fail to allocate when they should have. The Internal Revenue Service (the IRS) previously offered relief under Code Section 2642(g)(1) pursuant to Treasury Regulation Section 301.9100-3. Under new final regulations, effective for relief filed on or after May 6, 2024, clients can request a private letter ruling (PLR) to correct past mistakes in GST exemption allocations and elections. While some provisions of the final regulations are more burdensome than under the Section 9100 relief or even the proposed regulations, overall, the final regulations offer a more streamlined and thorough process for clients and their advisers to plan strategically for requesting relief from the IRS for these mistakes.

Generation-Skipping Transfer Tax