Background: Under IRC Sections $2505$ and $2010,$ an individual $($U$.$S$.$ citizen or resident$)$ may give up to a specified amount of gift without any federal gift tax liability. The $2017$ tax act, Pub. L$.$ No$.115-97,11061,$ increased the necessary exclusion amount from $$5$ million basic exclusion to $$10$ million, effective after December $31,2017.$ In addition to the basic increase to $$10$ million, under Section $2613$ a generation$-$skipping transfer tax $($two or more generations below the transferor$)$ may be used by taxpayers. The generation$-$skipping transfer tax applies to gifts to or in trust for beneficiaries who are "skip persons" as to the transferor.

To complete this week's discussion, imagine you are working for a tax firm. A client approached you with a question about the tax consequences of setting up an irrevocable trust for his two grandchildren to attend college. Please respond to the following:

Discuss the tax issues or consequences of the generation$-$skipping provision and a direct gift to the grandchildren instead of creating the trust.

Make at least two recommendations to support either a direct gift to the grandchildren or the creation of the trust.