Federal Transfer Tax
In a nutshell, any property you own at your death will be subject to federal estate taxation. If you try to reduce your estate by giving your property away during your lifetime, the value of the property you give away will be subject to gift taxation. And if you leave property to your grandchildren, the value of that property will be subject to generation skipping transfer tax.
This is a vast generalization of the transfer taxation system. Federal transfer taxation rules are complex and subject to a series of exceptions, exemptions, exclusions and special rules carved out to provide a certain amount of relief from transfer tax liability. It would be impossible to cover every nuance specific to each topic addressed in these pages. The goal here is to provide the reader with general information in an effort to understand estate planning, its importance and how a comprehensive plan could result in reduced taxes.