Cathy's revocable trust establishes a trust for her daughter, Maxine, and the children of Maxine. The assets will pass outright to Maxine's children when the youngest reaches age 25. All remaining assets in Cathy's estate will pass to charity. In 2023, Maxine dies in an auto accident. Cathy does not change her revocable trust prior to her death in 2024. How will the trust be treated for generation skipping transfer (GST) purposes?
Maxine's children are more than one generation removed from Cathy, so the trust will be subject to GST tax at inception
Maxine died prior to the trust's creation at Cathy's death, so the predeceased ancestor rule applies.
No GST tax implications
The trust will be treated as an indirect skip and GST tax will be imposed at distributions to grandchildren
Because the primary beneficiary predeceases, the trust will not be established, and all assets will pass as if Cathy is intestate.
