Clients are growing increasingly savvy about estate planning principles and techniques. Where a generation ago it seemed that most clients were suitably shocked to learn that federal and state estate taxes could erode more than 50 percent of their wealth without proper planning, today most clients — especially those in New Jersey — seem to come to the process armed already with a keen awareness of the present system and the wealth thresholds that trigger New Jersey estate tax ($675,000) and federal estate tax ($5,120,000 until Dec. 31, 2012). Clients also seem more familiar with the basic tools of the estate planning trade, such as the credit shelter trust, the unlimited marital deduction and the irrevocable life insurance trust.
In the past few months, however, I have encountered inquiries from several clients about the generation-skipping transfer (GST) tax. What is it? How does it work? Do I need to plan for it? This level of interest is surprising to me given the way practitioners have historically sought to downplay for their clients the role of this complicated tax and its operations.
