Generation-skipping beneficiaries? (Estate trust final tax returns)

Why does Turbo Tax Business ask if beneficiaries are "generation skipping" when I set up to do a final Form 1041 for an "estate trust"? That is, what is the implication of answering "yes"?
I don't know if "estate trust" is the correct term.
I am actually finalzing two trusts (separately, of course), Trust A (first survivor's trust) and Trust B (first decedent's trust), after both grantors (spouses) have passed away.
The named beneficiaries are the two children of the grantors. But since one child passed away, her two children (grandchildren of the grantors) become beneficiaries. Moreover, the surviving child is disclaiming half of his share to his child (grandchild of the grantors). Does that make his child a bona fide beneficiary; for example, does she get a portion of the K-1 distribution?
In any case, when I set up the grandchildren as beneficiaries, TTB asks if they are "generation skipping". That is simply defined as "two or more generations below" the grantors.
I could understand if the question were "is this a generation-skipping trust". (No.) But I did not think it mattered if the (contingent) beneficiaries are "generation skipping".
Any insight would be appreciated. I'm between CPAs, and my estate attorney is unavailable.
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I might have an answer to my own question.
I discovered that when a trust terminates and some beneficiaries are "skip persons", the trustee should file Form 706-GS(T).
Also, the trustee should file Form 706-GS(D-1) if there is a taxable distribution to "skip persons", and the recipients should file Form 706-GS(D).
Not sure if those forms should be filed for all distributions to "skip persons", or only if GSTT is due (i.e. the distribution exceeds the lifetime exemption or the annual exclusion).
But that goes beyond the scope of my question. I had heard of GS trusts. But I did not know that there are GS implications for "skip" beneficiaries of non-GS trust, too.
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snipped-for-privacy@gmail.com wrote:

It probably needs to be filed if it exceeds the annual exemption. There is a separate lifetime exclusion for generation skipping transfers.

The tax is on generation skipping transfers, not on the trust. The GST trust is to keep amounts that will be exempt from tax, and can be passed down for generations until the expiration of the rule against perpetuities. So gifts to skip beneficiaries must also be reported, whether in trust or not.
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Stu
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