Direct Skip (Tax) Law and Legal Definition

The taxation of a Generation-Skipping Transfer Tax (GST) depends on whether the transfer is a direct or an indirect skip. A Direct Skip is a property transfer made to a skip person that is subject to an estate or gift tax. An example of a direct skip would be a grandmother gifting property to a grandchild. The transferor, or his or her estate, is responsible for paying the GST tax for direct skips.

A generation skipping transfer (GST) refers to the shift of property by gift or at death to a person who is two or more generations below that of the person granting the gift. The person giving the gift is referred to as the transferor and the recipient is known as the skip person.