Using 'Delaware Tax Trap' to Avoid Generation-Skipping Taxes

Journal of Taxation, Vol. 68, pp. 242-248, 1988

7 Pages Posted: 21 Mar 2012 Last revised: 6 Jun 2012

See all articles by Jeffrey N. Pennell

Jeffrey N. Pennell

affiliation not provided to SSRN

Jonathan G. Blattmachr

Milbank, Tweed, Hadley & McCloy LLP

Date Written: November 3, 2011

Abstract

The “Delaware Tax Trap” of Internal Revenue Code §2041(a)(3) historically was a provision to be avoided but it can be a useful means of incurring estate tax rather than a more expensive generation-skipping transfer tax in situations in which the beneficiary should decide which tax to incur. This article introduces readers to the operation of this arcane provision and how it can be utilized by a beneficiary’s estate plan to best engineer the tax treatment that will apply when the beneficiary’s interest in a generation-skipping trust terminates.

Suggested Citation

Pennell, Jeffrey N. and Blattmachr, Jonathan G., Using 'Delaware Tax Trap' to Avoid Generation-Skipping Taxes (November 3, 2011). Journal of Taxation, Vol. 68, pp. 242-248, 1988, Available at SSRN: https://ssrn.com/abstract=1954062

Jeffrey N. Pennell (Contact Author)

affiliation not provided to SSRN ( email )

Jonathan G. Blattmachr

Milbank, Tweed, Hadley & McCloy LLP ( email )

1 Chase Manhattan Plaza
New York, NY 10005
United States
212-530-5066 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1,096
Abstract Views
3,658
rank
20,953
PlumX Metrics