What happens if a parent dies before their child, according to the Predeceased Parent Rule for GSTT?

The Predeceased Parent Rule under the Generation-Skipping Transfer Tax (GSTT) provides that if a parent predeceases their child, the child can inherit directly from their grandparent, as if the parent were still alive. This is designed to ensure that the wealth passes down through the intended lineage without interruptions caused by the death of the parent.

This rule is particularly relevant in the context of trusts and estate planning, where the goal often is to allow assets to skip generations without incurring additional taxation. The child steps into the position of the predeceased parent when determining inheritance rights, allowing the transfer of wealth to continue unobstructed. Therefore, the child is treated as though they were receiving the inheritance directly from the grandparent, ensuring that the estate plan reflects the wishes of the deceased grandparents regarding their legacy and the continuity of wealth through the family line.