What is the Generation-Skipping Tax? If you're a part of a family trust, the generation-skipping tax may be a financial option to consider. Author: May 30, 2021 8:00 AM EDT If you're a part of a family trust, the generation-skipping tax may be a financial option to consider. Estate taxes can take a big bite out of your family's wealth. In the past, one strategy to reduce estate taxes was to "skip" a generation of heirs to avoid the double estate tax liability that would have occurred if there were two transfers (one from parent to child and another from child to grandchild).