878 / What is a GST trust?

A GST trust is a trust that could have a generation-skipping transfer with respect to the transferor unless:

1. The trust provides that more than 25 percent of the trust corpus must be distributed to, or may be withdrawn by, one or more individuals who are non-skip persons, either (a) before the individual’s 46th birthday, (b) on or before a date prior to such birthday, or (c) upon the occurrence of an event that may reasonably be expected to occur before such birthday.


2. The trust provides that more than 25 percent of the trust corpus must be distributed to, or may be withdrawn by, one or more individuals who are non-skip persons and who are living on the date of death of an individual identified in the trust (by name or class) who is more than 10 years older than such individual(s).


3. The trust provides that, if one or more individuals who are non-skip persons die before a date or event described in (1) or (2), more than 25 percent of the trust corpus must either (a) be distributed to the estate(s) of one or more of such individuals, or (b) be subject to a general power of appointment exercisable by one or more of such individuals.


4. Any portion of the trust would be included in the gross estate of a non-skip person (other than the transferor) if such person died immediately after the transfer.


5. The trust is a charitable lead annuity trust (CLAT), charitable remainder annuity trust (CRAT), charitable remainder unitrust (CRUT), or a charitable lead unitrust (CLUT) with a non-skip remainder person.

For purposes of these GST trust rules, the value of transferred property is not treated as includable in the gross estate of a non-skip person nor subject to a power of withdrawal if the withdrawal right does not exceed the amount of the gift tax annual exclusion ($19,000 in 2025, $18,000 in 2024, $17,000 in 2023; $16,000 in 2022; $15,000 in 2018-2021) with respect to the transfer.¹ It is also assumed that a power of appointment held by a non-skip person will not be exercised.