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.
- posted 1 year ago