Generation skipping transfer taxes (GSTT) will apply to transfers made to a “skip party” that are completed during life or at death. A “skip party” is defined as a person who is deemed to be two or more generations below the transferor.  For example,  a grandfather making a lifetime gift to his grandchild or great grandchild could trigger GSTT in addition to federal gift taxes.  If you are considering a transfer to a skip party, you may want to consider using special dynasty trusts to obtain favorable tax benefits by maximizing your GSTT exemption.  The intricacies involved with creating such trusts will require competent legal and financial advice.