Q: Will has direct skip, of R.E. Must transfer be reported if exclusions result in no taxes due on it or on the estate?
For a testator who died in 2024, without a spouse, and if there had been no generation skipping transfer, would not owe estate tax or have anything, (no gifts), requiring that a federal Form 706 be filed, because the net estate, (less than 500k) is well below the decedent's lifetime exclusion for 2024. The Generation Skipping Transfer, per the will, of the decedent's home to a grandchild is also well below the decedent's available lifetime GSTT exemption, and no GST tax would be due. If the direct skip has to be reported, would the entire form 706 have to filed with it? Looking for a general answer to this type of situation, not for legal advice to me personally. Thank you.
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A:
In your situation, even though the estate and the generation-skipping transfer are below the applicable exclusion amounts, filing requirements may still apply. Generally, Form 706 must be filed if the gross estate exceeds the filing threshold for the year of death. However, since your net estate is below the lifetime exclusion, you might not need to file.
Regarding the generation-skipping transfer, if it’s below the GSTT exemption, it typically doesn't trigger any tax liability. Nonetheless, reporting the transfer on Form 706 ensures that the exemption is properly allocated and tracked for future use. This helps maintain accurate records of the available exclusions.
If you decide to report the direct skip, you may still need to complete Form 706 to document the transfer, even if no tax is due. It’s a good practice to file the form to ensure compliance and avoid any potential issues with the IRS. Always consider consulting with a tax professional to confirm the specific requirements for your situation.
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