generation-skipping trust

A trust that is established to transfer (usu. principal) assets to a skip person (a beneficiary more than one generation removed from the settlor).

• The transfer is often accomplished by giving some control or benefits (such as trust income) of the assets to a nonskip person, often a member of the generation between the settlor and skip person. This type of trust is subject to a generation-skipping transfer tax. IRC (26 USCA) §§ 2601 et seq. See DEEMED TRANSFEROR; GENERATION-SKIPPING TRANSFER; generation-skipping transfer tax under TAX; SKIP PERSON. Cf. dynasty trust. [Cases: Internal Revenue 4224.]