The Internal Revenue Service has published final regulations that add more details to its interpretation of the “predeceased parent rule.”[@@]
The proposed regulation could affect financial advisors who are trying to help wealthy clients with complicated personal lives minimize exposure to generation-skipping transfer taxes.
GST taxes affect wealthy taxpayers who want to transfer assets to grandchildren, great-grandchildren and other lineal descendants.
One major section of the new final regulations affects grandchildren of a wealthy taxpayer who end up inheriting directly from the wealthy grandparent because their parents have died.
The new final regulations make it clear that the IRS will move the children up into their parents’ generation, for purposes of calculating GST taxes, and the IRS then will move up the children’s own lineal descendants up one generation, too, according to a team led by Lian Mito, an IRS official, that has published a discussion of the new regulations today in the Federal Register.