1 | Page
Cannon Trust 2 Generation Skipping Trust
Tax Questions and Correct Answers
Basic Exclusion Amount or Applicable Exclusion Amount Ans:
$13,610,000 in 2024 or $10,000,000 Indexed for Inflation
Applicable Credit Ans: $5,389,000 Tentative Tax on the Applicable
Exclusion Amount; must apply this credit against gift tax
2025 Maximum Rate Ans: 40%
Annual Gift Tax Exclusion Ans: $19,000 for 2025; $10,000 Indexed
for Inflation; Includes all non-spousal "gratuitous" transfers of
present interests - birthday and Christmas gifts, help with rent,
purchase of car
BEA Ans: GSTT Exemption is equal to this amount
Pre-deceased Ans: When a child ________________ the transfer, the
more remote descendants all "step-up" a generation
Indexed Ans: The GST Exemption amount is a what amount?
Taxable Termination Ans: Occurs when the interest of the last
Non-Skip beneficiary ends
Inclusion Ratio Ans: Applies at the time of direct skip or for the
life of the arrangement for an irrevocable trust; Determines the
amount of the transfer that is subject to GST; Stays with the trust
for the LIFE of the trust; 1 - (exemption allocated / net amount
funded)
© 2025 All rights reserved
, 2 | Page
Generation Ans: Family members are assigned to what based on
their relationship to the transferor
Skip Person Ans: Someone two or more generations below the
generation of the transferor
Direct Skip Ans: A type of skip that takes place when the transfer
becomes irrevocable; A lifetime or testamentary transfer to a skip
person that is also subject to gift or estate tax
QTIP Ans: To maximize both spouses use of the generation
skipping trust exemption in an optimal deduction plan, what type
of marital trust must be used?
Taxable Distribution Ans: Distribution of funds to a skip person
from a trust that also has non-skip persons with an interest in the
trust; Recipient skip person pays the tax; Qualified transfers are
NOT taxable distributions
General Powers of Appointment Ans: Power to appoint oneself,
one's estate, one's creditors, or the creditors of one's estate;
Outright Ownership, Lifetime GPA, Testamentary GPA, 5x5,
Crummey Powers
Limited Powers of Appointment Ans: Ascertainable Standard,
Power to Appoint to a Specified Class, Income Powers (all or
discretionary); These powers do not create Grantor status or estate
inclusion
Split Gifts Ans: Husbands and wives may elect to split gifts to use
the annual exclusion/lifetime exemption of the other spouse for
gifts made from one spouse's assets; Each spouse is deemed to
have made a gift of 50% of each gift made by either spouse for gift
and GST
© 2025 All rights reserved
Cannon Trust 2 Generation Skipping Trust
Tax Questions and Correct Answers
Basic Exclusion Amount or Applicable Exclusion Amount Ans:
$13,610,000 in 2024 or $10,000,000 Indexed for Inflation
Applicable Credit Ans: $5,389,000 Tentative Tax on the Applicable
Exclusion Amount; must apply this credit against gift tax
2025 Maximum Rate Ans: 40%
Annual Gift Tax Exclusion Ans: $19,000 for 2025; $10,000 Indexed
for Inflation; Includes all non-spousal "gratuitous" transfers of
present interests - birthday and Christmas gifts, help with rent,
purchase of car
BEA Ans: GSTT Exemption is equal to this amount
Pre-deceased Ans: When a child ________________ the transfer, the
more remote descendants all "step-up" a generation
Indexed Ans: The GST Exemption amount is a what amount?
Taxable Termination Ans: Occurs when the interest of the last
Non-Skip beneficiary ends
Inclusion Ratio Ans: Applies at the time of direct skip or for the
life of the arrangement for an irrevocable trust; Determines the
amount of the transfer that is subject to GST; Stays with the trust
for the LIFE of the trust; 1 - (exemption allocated / net amount
funded)
© 2025 All rights reserved
, 2 | Page
Generation Ans: Family members are assigned to what based on
their relationship to the transferor
Skip Person Ans: Someone two or more generations below the
generation of the transferor
Direct Skip Ans: A type of skip that takes place when the transfer
becomes irrevocable; A lifetime or testamentary transfer to a skip
person that is also subject to gift or estate tax
QTIP Ans: To maximize both spouses use of the generation
skipping trust exemption in an optimal deduction plan, what type
of marital trust must be used?
Taxable Distribution Ans: Distribution of funds to a skip person
from a trust that also has non-skip persons with an interest in the
trust; Recipient skip person pays the tax; Qualified transfers are
NOT taxable distributions
General Powers of Appointment Ans: Power to appoint oneself,
one's estate, one's creditors, or the creditors of one's estate;
Outright Ownership, Lifetime GPA, Testamentary GPA, 5x5,
Crummey Powers
Limited Powers of Appointment Ans: Ascertainable Standard,
Power to Appoint to a Specified Class, Income Powers (all or
discretionary); These powers do not create Grantor status or estate
inclusion
Split Gifts Ans: Husbands and wives may elect to split gifts to use
the annual exclusion/lifetime exemption of the other spouse for
gifts made from one spouse's assets; Each spouse is deemed to
have made a gift of 50% of each gift made by either spouse for gift
and GST
© 2025 All rights reserved
