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exemption. The denominator of the

estate. Therefore, you should obtain

inclusion ratio, an allocation of GST

fraction is:

information regarding the allocation of

exemption will only become effective at

the exemption to this trust from the

the close of the estate tax inclusion

1. The value of the property

settlor or the executor of the settlor's

period (ETIP).

transferred to the trust, minus

estate, as applicable.

The value of the property for the

2. The sum of:

If the settlor's entire GST exemption

purpose of figuring the inclusion ratio is

a. Any federal estate tax or state

is not allocated by the due date

the estate tax value if the property is

death tax actually recovered from the

(including extensions) of the settlor's

includible in the transferor's gross

trust attributable to the property, and

estate tax return, the exemption is

estate. Otherwise, the property is valued

b. Any charitable deduction allowed

automatically allocated to the settlor's

at the close of the ETIP, provided that

under section 2055 or 2522 with respect

generation-skipping transfers under the

the GST exemption is allocated on a

to the property.

rules of section 2632.

timely filed gift tax return for the

calendar year in which the ETIP closes.

Round the applicable fraction to at

Denominator. Valuation of trust as-

The ETIP closes at the earliest of:

least the nearest one-thousandth (for

sets. In general, for an inter vivos

The time the transferred property

example, “.001”).

transfer, you should use the gift tax

would no longer be includible in the

value in the denominator of the

Numerator. GST exemption. Every

settlor's estate,

applicable fraction as long as the

individual settlor is allowed a lifetime

The date of a generation-skipping

allocation of the GST exemption was

GST exemption against property that

transfer of the property, or

made on a timely filed gift tax return or

the individual has transferred. For

The date of death of the settlor.

was deemed made under section

generation-skipping transfers made

2632(b)(1).

If the allocation is not made on a

through 1998, the amount of the

timely filed gift tax return, the property is

If the allocation of the exemption to

exemption was $1 million. The GST

valued at the time of the late allocation.

an inter vivos transfer is not made on a

exemption amounts for 1999 through

timely filed gift tax return and is not

2017 are as follows:

Multiple transfers. When a transfer is

deemed made under section 2632(b)

made to a pre-existing trust, the

(1), the value for purposes of the

Year of Transfer

GST

applicable fraction must be refigured.

Exemption

applicable fraction is the value of the

The numerator of the new fraction is the

property transferred at the time the

1999

$1,010,000

. . . . . . . . . . . . .

sum of:

allocation under section 2632(a) is filed

2000

$1,030,000

. . . . . . . . . . . . .

1. The exemption allocated to the

with the IRS.

2001

$1,060,000

. . . . . . . . . . . . .

current transfer, and

The value of a testamentary transfer

2002

$1,100,000

. . . . . . . . . . . . .

2. The nontax portion of the trust

is generally the estate tax value.

2003

$1,120,000

. . . . . . . . . . . . .

immediately before the current transfer

2004 and 2005

$1,500,000

For qualified terminable interest

. . . . . . .

(the product of the applicable fraction

property (QTIP) that is included in the

2006, 2007, and 2008

$2,000,000

. .

and the value of all the property in the

estate of the surviving spouse of the

2009

$3,500,000

trust immediately before the current

. . . . . . . . . . . . .

settlor because of section 2044, if the

2010 and 2011

$5,000,000

transfer).

. . . . . . .

surviving spouse is considered the

2012

$5,120,000

. . . . . . . . . . . . .

The denominator of the new fraction

transferor under section 2652(a) for

2013

$5,250,000

. . . . . . . . . . . . .

is the sum of:

GST purposes, the value is the estate

2014

$5,340,000

. . . . . . . . . . . . .

tax value in the estate of the surviving

1. The value of the current transfer

2015

$5,430,000

. . . . . . . . . . . . .

spouse.

(minus any federal estate tax or state

2016

$5,450,000

. . . . . . . . . . . . .

death tax actually paid by the trust

A special QTIP election allows

2017

$5,490,000

. . . . . . . . . . . . .

attributable to such property and any

property for which a QTIP election was

charitable deduction allowed for such

made for estate or gift tax purposes to

property), and

be treated for GST tax purposes as if

A valid Deceased Spousal

the QTIP election had not been made. If

2. The value (determined under the

Unused Exclusion Amount

the special QTIP election has been

rules described above) of all property in

("DSUE" or portability) election

made, the predeceased settlor spouse

the trust immediately before the current

CAUTION

by an executor of a deceased spouse's

is the transferor and the value is that

transfer.

estate does not apply to or impact GST

spouse's estate or gift tax value under

tax exemption.

To figure the inclusion ratio, use only

the rules described above. The settlor

the value of the total additions made to

spouse or the executor of the

For existing trusts, transferors may

the trust after October 22, 1986.

predeceased settlor spouse's estate

allocate the additional GST exemption

must have made the special QTIP

Charitable lead annuity trusts. For

amount attributable to indexing

election.

termination of an interest in a charitable

adjustments if they otherwise qualify

lead annuity trust, the numerator of the

under the existing rules for late

Transfers subject to an estate tax in-

applicable fraction is the adjusted GST

allocations. For more information, see

clusion period. If a transferor made an

exemption as defined below. The

section 2632 and Multiple transfers,

inter vivos transfer, and the property

denominator is the value of the trust

later.

transferred would have been includible

immediately after the termination of the

in the transferor's estate if he or she had

Once made, allocations are

charitable lead annuity interest.

died immediately after the transfer

irrevocable.

The adjusted GST exemption is the

(other than by reason of the transferor

Allocation of the GST exemption is

sum of:

dying within 3 years of making the gift),

made by the settlor on Form 709 or on

for purposes of determining the

Form 706 by the executor of the settlor's

-6-

Instructions For Form 706-Gs(T) - Generation-Skipping Transfer Tax Return For Terminations Page 6

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