Instructions For Form 706 - 2016 Page 44
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54terminations from the trust can be made
and 511(b)(2)) is a transferee, then
described in sections 511(a)(2) and
only to skip persons.
each person who indirectly receives the
511(b)(2) are assigned to the
property interests through the entity is
decedent's generation. Transfers to
Non-skip person. A non-skip person is
treated as a transferee and is assigned
such organizations are therefore not
any transferee who is not a skip person.
to a generation as explained in the
subject to the GST tax.
Determining the generation of a
above rules. However, this look-through
Charitable remainder trusts.
transferee. Generally, a generation is
rule does not apply for the purpose of
Transfers to or in the form of charitable
determined along family lines as
determining whether a transfer to a trust
remainder annuity trusts, charitable
follows:
is a direct skip.
remainder unitrusts, and pooled income
1. Where the beneficiary is a lineal
Generation assignment where
funds are not considered made to skip
descendant of a grandparent of the
intervening parent is deceased. A
persons and, therefore, are not direct
decedent (that is, the decedent's
special rule may apply in the case of the
skips even if all of the life beneficiaries
cousin, niece, nephew, etc.), the
death of a parent of the transferee. For
are skip persons.
number of generations between the
terminations, distributions, and transfers
Estate tax value. Estate tax value is
decedent and the beneficiary is
after December 31, 1997, the existing
the value shown on Schedules A
determined by subtracting the number
rule that applied to grandchildren of the
through I of this Form 706.
of generations between the grandparent
decedent has been extended to apply to
and the decedent from the number of
other lineal descendants.
Examples. The rules above can be
generations between the grandparent
illustrated by the following examples:
If property is transferred to an
and the beneficiary.
individual who is a descendant of a
1. Under the will, the decedent's
2. Where the beneficiary is a lineal
parent of the transferor, and that
house is transferred to the decedent's
descendant of a grandparent of a
individual's parent (who is a lineal
daughter for her life with the remainder
spouse (or former spouse) of the
descendant of the parent of the
passing to her children. This transfer is
decedent, the number of generations
transferor) is deceased at the time the
made to a “trust” even though there is
between the decedent and the
transfer is subject to gift or estate tax,
no explicit trust instrument. The interest
beneficiary is determined by subtracting
then for purposes of generation
in the property transferred (the present
the number of generations between the
assignment, the individual is treated as
right to use the house) is transferred to a
grandparent and the spouse (or former
if he or she is a member of the
non-skip person (the decedent's
spouse) from the number of generations
generation that is one generation below
daughter). Therefore, the trust is not a
between the grandparent and the
the lower of:
skip person because there is an interest
beneficiary.
The transferor's generation or
in the transferred property that is held by
3. A person who at any time was
The generation assignment of the
a non-skip person. The transfer is not a
married to a person described in (1) or
youngest living ancestor of the
direct skip.
(2) above is assigned to the generation
individual, who is also a descendant of
2. The will bequeaths $100,000 to
of that person. A person who at any time
the parent of the transferor.
the decedent's grandchild. This transfer
was married to the decedent is
The same rules apply to the
is a direct skip that is not made in trust
assigned to the decedent's generation.
generation assignment of any
and should be shown on Schedule R.
4. A relationship by adoption or
descendant of the individual.
3. The will establishes a trust that is
half-blood is treated as a relationship by
This rule does not apply to a transfer
required to accumulate income for 10
whole-blood.
to an individual who is not a lineal
years and then pay its income to the
5. A person who is not assigned to a
descendant of the transferor if the
decedent's grandchildren for the rest of
generation according to (1), (2), (3), or
transferor has any living lineal
their lives and, upon their deaths,
(4) above is assigned to a generation
descendants.
distribute the corpus to the decedent's
based on his or her birth date, as
great-grandchildren. Because the trust
If any transfer of property to a trust
follows:
has no current beneficiaries, there are
would have been a direct skip except for
no present interests in the property
a. A person who was born not more
this generation assignment rule, then
transferred to the trust. All of the
than 12
years after the decedent is in
the rule also applies to transfers from
1
2
persons to whom the trust can make
the decedent's generation.
the trust attributable to such property.
future distributions (including
b. A person born more than 12
See examples in Regulations section
1
2
distributions upon the termination of
years, but not more than 37
years,
26.2651–1(c).
1
2
interests in property held in trust) are
after the decedent is in the first
skip persons (for example, the
Ninety-day rule. For purposes of
generation younger than the decedent.
decedent's grandchildren and
determining if an individual's parent is
c. A similar rule applies for a new
great-grandchildren). Therefore, the
deceased at the time of a testamentary
generation every 25 years.
trust itself is a skip person and you
transfer, an individual's parent who dies
should show the transfer on
no later than 90 days after a transfer
If more than one of the rules for
Schedule R.
occurring by reason of the death of the
assigning generations applies to a
transferor is treated as having
4. The will establishes a trust that is
transferee, that transferee is generally
predeceased the transferor. The 90-day
assigned to the youngest of the
to pay all of its income to the decedent's
rule applies to transfers occurring on or
generations that would apply.
grandchildren for 10 years. At the end of
after July 18, 2005. See Regulations
10 years, the corpus is to be distributed
If an estate, trust, partnership,
section 26.2651-1, for more information.
to the decedent's children. All of the
corporation, or other entity (other than
present interests in this trust are held by
certain charitable organizations and
Charitable organizations.
skip persons. Therefore, the trust is a
trusts described in sections 511(a)(2)
Charitable organizations and trusts
skip person and you should show this
-44-
Part Instructions
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