taxable distribution
- A type of transfer in which property, held in trust, shifts to a person of a younger generation than the grantor, making the recipient liable for a tax on generation-skipping transfers when receiving a disbursement of income or principal
- Despite Karen's efforts to mitigate tax liabilities, the shift of her assets to her granddaughter constituted a taxable distribution.
- Due to the taxable distribution, Kevin was liable for generation-skipping transfer tax after he received the income from his uncle's trust.
- As a part of estate planning, it's crucial to understand how a taxable distribution can significantly impact the recipients in younger generations.
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