The GST Tax, under 26 U.S.C. Chapter 13, is an additional federal tax designed to prevent families from avoiding estate tax at the middle generation. It applies to transfers made to “skip persons,” which include grandchildren or anyone more than 37½ years younger than the transferor, as well as certain long-term or dynasty trusts. Each person has a separate GST exemption that can be allocated to protect transfers from this extra tax.
