Which of the following constitute direct skips? Assume in each question that the

Question

Which of the following constitute direct skips? Assume in each question that the parents of Grandchild are living unless stated otherwise.

a.) Donor makes an intervivos transfer of property to Donor's child.

b.) Donor makes an intervivos transfer of property to Donor's Grandchild.

c.) Donor makes an intervivos transfer of property to Donor's Great Grandchild.

d.) Decedent bequeaths property to Decedent's Grandchild.

e.) Donor makes an intervivos transfer of property to Donor's Grandchild, but Grandchild's Parent is dead and Grandchild is being raised by Grandchild's Other Parent.

f.) Donor makes a transfer of property to a trust with income to Grandchild for ten years, and remainder to Grandchild or Grandchild's estate.

g.) Same as Question (1)(f),above,except the trust is revocable.

h.) Same as (1)(f),above, but Grandchild's Parent is dead (Donor's Child)

i.) Donor pays grandchild's law school tuition.

Explanation / Answer

Since, there are multiple parts to the question, the first five (a to e) have been answered.

__________

Transfer Type Nature (Direct Skip/Not Direct Skip) Explanation a Donor makes an intervivos transfer of property to Donor's child Not a Direct Skip Here the Donor's child has an interest in the property transferred. In this case section 2652 (c) won't be applicable as there is a direct transfer and no trust is inolved. This transfer will be subject to Chapter 12 of Gift Tax, but will not be considered as a direct skip as the transfer is not made to a skip person. Generation assignment is less than 2 and for a direct skip, it has to be 2 or more. b Donor makes an intervivos transfer of property to Donor's Grandchild Direct Skip Here the Donor's grandchild has an interest in the property transferred and will be treated as a skip person under 2613 (a). Generation assigment is 2 in this case. This transfer is subject to Chapter 12 of Gift Tax and will be considered as a direct skip under section 2612(c)(1). c Donor makes an intervivos transfer of property to Donor's Great Grandchild Direct Skip Here the great grandchild is a skip person as 2 generations are skipped. The generation assignment is, therefore, 2. In case of transfers skipping multiple generations, the transfer will be taxable only a single time. d Decedent bequeaths property to Decedent's Grandchild Direct Skip This transfer is subject to Gross Estate under section 2033. Here, generation assignment is 3. It will be treated as a direct skip. e Donor makes an intervivos transfer of property to Donor's Grandchild, but Grandchild's Parent is dead and Grandchild is being raised by Grandchild's Other Parent Not a Direct Skip This transfer will be covered under Section 2651(e) since the child is dead at the time of transfer. Here, the generation assignment would be less than 2, as after the death of the parent (donor's child), only one generation would be treated as skipped.

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