Legal Question in Wills and Trusts in California

The GST tax will not apply to estates of decedents dying and generation skipping transfers that occur during 2010 (that is, unless the law is changed retroactively). So, in theory, GST tax will not apply to taxable terminations, distributions, or direct skips during 2010, and in later years if the estate and GST tax are repealed. But if the law stays the same, a GST trust funded in 2010 might still be subject to taxable terminations and distributions in 2011 and later years, so the planning would still be worthwhile. That being said, the GST provisions would be problematic in the event of a permanent repeal, for instance if the trustee were directed to fund the settlor's "unused GST exemption," with the residue passing to the surviving spouse or children. Ambiguous formula clauses like these would cause problems down the line. If this is your case, you should talk to a trust attorney to review your estate planning documents.

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