What Is the Generation-Skipping Transfer Tax?

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Takeaways

The generation-skipping transfer (GST) tax applies primarily to very large estates that transfer wealth to grandchildren (or unrelated individuals 37.5+ years younger), ensuring at least one layer of transfer tax is paid.
The new One Big Beautiful Bill Act permanently increases the GST exemption to $15 million per person starting in 2026 (up from $13.99 million in 2025), meaning most families will not be affected by this tax.
Despite the high exemption, planning mistakes can lead to a significant 40 percent flat tax on large transfers.

The estate tax gets many headlines and was a focal point in recent negotiations over President Trump’s One Big Beautiful Bill Act (OBBBA). But if you plan to leave property to a grandchild, there’s another tax you should know about that is also affected by the new law: the generation-skipping transfer (GST) tax.

Designed to close a loophole in the estate tax system, the GST tax is a tax on property passed from a grandparent to a grandchild (or great-grandchild) in a will or trust. The tax is also assessed on transfers made to unrelated individuals who are more than 37.5 years younger than the person making the gift.

Since its introduction, the GST tax has been paired with the federal gift and estate tax exemption, which is set to change again in 2026 under the OBBBA. Only the value transferred above this exemption amount is subject to the GST tax’s flat 40 percent tax rate.

This high threshold means that most people, just as with the estate tax, will never encounter the GST tax. But for those families that do, even unintentionally, the consequences can be costly. And avoiding surprises takes clear, deliberate planning.

Why the GST Tax Exists and How It Works

Prior to the GST tax, there was no tax rule preventing individuals from avoiding estate and gift taxes indefinitely by leaving assets to future descendants.

Traditionally, grandparents would leave their estates to their children, incurring estate taxes. Then the children would pass on the estates to the grandchildren, incurring estate taxes again. But wealthier families realized they could bypass that middle step by leaving assets directly to grandchildren and avoid an entire layer of tax.

To stop this “generation-skipping” strategy, Congress enacted the GST tax. The tax applies to transfers made to related individuals who are more than one generation below the transferor and to unrelated individuals who are more than 37.5 years younger.

The GST tax ensures that at least one level of transfer tax is paid as property moves down family lines. Here’s how it works:

What It Taxes

The GST tax applies to three types of transfers:

Direct skips (e.g., a grandparent gifts or bequeaths assets directly to a grandchild)
Taxable distributions (trust distributions to a skip person)
Taxable terminations (when a trust’s nonskip beneficiary dies and only skip persons remain)

Understanding which transfers fall into these categories is the first step in spotting GST exposure before it becomes a costly surprise.

Who Counts as a “Skip Person”

A grandchild or more remote descendant
Any individual who is 37.5+ years younger than the transferor
Certain trusts where all beneficiaries are skip persons

Skip-person status isn’t always intuitive (e.g., in blended families), so it’s important to confirm how the rules apply before making large transfers.

GST Exemption
Each person has a lifetime GST exemption ($13.99 million in 2025, which will increase in 2026 under the OBBBA to $15 million) that is paired with their federal estate and gift tax exemption. This means the same pool of exemption shields from taxation:

Lifetime gifts
Transfers at death
Generation-skipping transfers

When you use part of your exemption for gifting or estate tax purposes, you reduce the amount available to protect generation-skipping transfers, and vice versa. Only the value of transfers above the remaining exemption is subject to GST tax.

GST Tax Rate

A flat 40 percent, in addition to any applicable estate or gift tax

Because a generation-skipping transfer may be subject to both the GST tax and the estate or gift tax, even a single misstep can result in a significantly higher overall tax bill.

Nonportability Rule
Unlike the estate and gift tax exemption, the GST exemption is not portable between spouses; each spouse must use it, or it is lost. Failing to use a spouse’s exemption is one of the most common—and most avoidable—GST planning mistakes.

Historical Changes to the GST Tax (and What’s New for 2026)

The GST tax has been with us now for 50 years. During that time, it has undergone a series of changes through tax legislation, most recently in 2025’s OBBBA, with new rules set to take effect in 2026.

1976 — First generation-skipping tax enacted. Congress created the original GST system in the Tax Reform Act of 1976. It applied mainly to multigenerational trusts and proved too complicated to administer, leading to repeal and replacement.
1986 — Modern GST tax established. Congress replaced the original GST tax with the current framework in the Tax Reform Act of 1986, expanding it to cover single-generation gifts and transfers and introducing the concepts of direct skips, taxable distributions, taxable terminations, and the unified GST exemption.
2001 — Temporary exemption increases. The Economic Growth and Tax Relief Reconciliation Act of 2001 raised the estate, gift, and GST exemptions and scheduled them to sunset.
2012 — Exemption made permanent and indexed. The American Taxpayer Relief Act of 2012 permanently unified the exemptions and set the GST rate at 40 percent.
2017 — TCJA temporarily doubles transfer-tax exemptions through 2025. The Tax Cuts and Jobs Act (TCJA) sharply increased the estate, gift, and GST exemptions, but only on a temporary basis. These higher amounts were set to expire at the end of 2025, creating years of uncertainty for long-term planning.
2025–2026 — OBBBA permanently increases the exemption. President Trump’s One Big Beautiful Bill Act permanently increases the GST exemption to $15 million per individual beginning January 1, 2026, avoiding the scheduled anticipated drop to roughly $7 million. It also provides annual inflation indexing after 2026 and leaves the GST exemption nonportable.

A consistent legislative theme runs through this history: Congress periodically adjusts the exemption and structure of the GST tax, but the core purpose—ensuring at least one layer of transfer tax on multigenerational wealth transfers—has remained the same.

Due to the high exemption amount, which gets even higher for 2026, only estates with very large values are affected. To put the number of households subject to the GST tax in perspective, only about 0.07 percent of decedents pay the related federal estate tax.

Where GST Tax Problems Commonly Arise (and How to Avoid Them)

New for 2026, the OBBBA gives the GST tax a rare degree of permanence. Unlike the TCJA, there’s no built-in sunset, and changing the exemption again would require Congress to pass new legislation. And unlike some other OBBBA tax provisions, GST tax changes drew relatively little debate, so most planners expect this framework to remain stable for the foreseeable future—making it all the more important to understand and apply the GST rules correctly under today’s law.

Below are common areas where GST issues arise, paired with practical steps to prevent them.

Failing to Allocate GST Exemption Properly

What goes wrong:
Sometimes a trust is funded with the expectation that the GST exemption will be allocated automatically. However, the rules don’t always treat each transfer as “automatic.” When no exemption is allocated, the trust becomes partially or fully subject to GST tax.

Why it matters:
This can turn routine distributions to grandchildren—or future generations—into taxable events.

How to avoid it:

Confirm whether automatic allocation applies to each gift.
Work with a planning professional to ensure your trust is set up as GST-exempt if that is the intent.
Review older or multidonor trusts where exemption records may be incomplete.

Mixed Beneficiaries or Changing Family Structures

What goes wrong:
Blended families, step-grandchildren, adopted grandchildren, or later-in-life remarriages can affect who counts as a “skip person.” A beneficiary you assume isn’t skip-status may actually be treated as one under the age and relationship rules.

Why it matters:
Misclassifying a beneficiary can make an ordinary distribution unexpectedly taxable.

How to avoid it:

Review your trust language when family structures change.
Avoid generic terms like “issue” without clear definitions.
Consult your attorney any time a new descendant joins the family through marriage or adoption.

Unintentional Skips Through Gifting or 529 Plans

What goes wrong:
Gifts made directly to grandchildren—including contributions to a grandchild’s 529 plan—can be treated as direct skips for GST purposes.

Why it matters:
The gift may require a GST exemption allocation or trigger GST tax if the exemption is already exhausted.

How to avoid it:

Consider funding education through a GST-exempt trust rather than direct gifts.
Use the five-year gift tax averaging rule carefully and coordinate GST allocations at the same time.

Taxable Terminations in Older or Nonexempt Trusts

What goes wrong:
A trust appears harmless for years while children are beneficiaries. But once a child dies and only grandchildren remain, the trust may experience a taxable termination, triggering GST tax all at once.

Why it matters:
This frequently comes as a surprise, especially for trusts created decades ago.

How to avoid it:

Identify any existing trusts that were not made GST-exempt.
Stress-test the trust terms against likely family scenarios.
Add powers of appointment or other provisions that allow trust assets to be redirected if needed.

Large Gifts to Younger, Nonfamily Individuals

What goes wrong:
The GST tax applies not only to descendants but also to anyone more than 37.5 years younger than the transferor. Individuals such as caregivers, nieces/nephews/cousins once removed, or close family friends can fall into this category.

Why it matters:
A generous gift to a younger individual may accidentally qualify as a direct skip.

How to avoid it:

Check the age difference before making large gifts.
Consider structuring gifts through annual exclusions or non-GST-exempt trusts to manage exposure.

Losing a Spouse’s GST Exemption

What goes wrong:
Families may assume, incorrectly, that their unused GST exemption “rolls over” to the surviving spouse like the estate tax exemption does.

Why it matters:
GST exemption is not portable. If a spouse dies without using theirs, it’s gone forever.

How to avoid it:

Use bypass trusts or other structures to capture each spouse’s exemption.
Coordinate estate and GST planning rather than treating them separately.

Mixing Exempt and Nonexempt Assets in the Same Trust

What goes wrong:
Additional contributions made to an existing GST-exempt trust after 2026 may dilute the trust’s inclusion ratio and create a “mixed” trust—part exempt, part taxable.

Why it matters:
Mixed trusts complicate administration and can create unexpected tax exposure decades later.

How to avoid it:

Avoid adding assets to a GST-exempt trust unless the gift will also be GST-exempt.
If needed, create a separate trust for new contributions to keep inclusion ratios clean.

Choosing the Wrong State for Long-Term Trusts

What goes wrong:
Some states allow dynasty trusts to last indefinitely; others still enforce traditional Rule Against Perpetuities limits. Moving a trust or appointing a new trustee can unintentionally change the governing law.

Why it matters:
A trust meant to last for multiple generations may not legally be able to do so, undermining GST planning.

How to avoid it:

Choose a trust jurisdiction intentionally.
Build in trust protector provisions for flexibility.
Review situs if trustees or beneficiaries relocate.

A Good Time to Revisit Your Estate Plan

The OBBBA doesn’t just change the GST tax. It also updates several other tax rules that may affect how your estate plan works. That makes this an ideal time to look over your financial and legal documents and make sure your planning strategies fully incorporate today’s law.

Even if the GST tax won’t apply to you, a quick review can catch other issues, such as outdated beneficiaries, old executors, or planning strategies built around rules from years ago. Changes in the law are a natural checkpoint, providing an opportunity to confirm that your plan still does what you expect it to do and protects the people you intend it to protect.

<h2><img alt="Senior man shows a handful of cash to his grandson." src="https://cdn.elderlawanswers.com/common/uploads/photos/18298-grandpa money.jpg" style="float:right; height:200px; margin-left:10px; margin-right:10px; width:317px" />Takeaways</h2> <ul> <li>The generation-skipping transfer (GST) tax applies primarily to very large estates that transfer wealth to grandchildren (or unrelated individuals 37.5+ years younger), ensuring at least one layer of transfer tax is paid.</li> <li>The new One Big Beautiful Bill Act permanently increases the GST exemption to $15 million per person starting in 2026 (up from $13.99 million in 2025), meaning most families will not be affected by this tax.</li> <li>Despite the high exemption, planning mistakes can lead to a significant 40 percent flat tax on large transfers.</li> </ul> The estate tax gets many headlines and was a focal point in recent negotiations over President Trump’s <a href="https://www.elderlawanswers.com/estate-long-term-care-plans-under-the-big-beautiful-bill-21136">One Big Beautiful Bill Act</a> (OBBBA). But if you plan to leave property to a grandchild, there’s another tax you should know about that is also affected by the new law: the generation-skipping transfer (GST) tax. Designed to close a loophole in the estate tax system, the GST tax is a tax on property passed from a grandparent to a grandchild (or great-grandchild) in a will or trust. The tax is also assessed on transfers made to unrelated individuals who are more than 37.5 years younger than the person making the gift. Since its introduction, the GST tax has been paired with the <a href="https://www.elderlawanswers.com/annual-gift-tax-and-estate-tax-exemptions-for-2026-21282">federal gift and estate tax exemption</a>, which is set to change again in 2026 under the OBBBA. Only the value transferred above this exemption amount is subject to the GST tax’s flat 40 percent tax rate. This high threshold means that most people, just as with the estate tax, will never encounter the GST tax. But for those families that do, even unintentionally, the consequences can be costly. And avoiding surprises takes clear, deliberate planning. <h2>Why the GST Tax Exists and How It Works</h2> Prior to the GST tax, there was no tax rule preventing individuals from avoiding estate and gift taxes indefinitely by leaving assets to future descendants. Traditionally, grandparents would leave their estates to their children, incurring <a href="https://www.elderlawanswers.com/estate-taxation-12091" target="_blank">estate taxes</a>. Then the children would pass on the estates to the grandchildren, incurring estate taxes again. But wealthier families realized they could bypass that middle step by leaving assets directly to grandchildren and avoid an entire layer of tax. To stop this “generation-skipping” strategy, Congress enacted the GST tax. The tax applies to transfers made to related individuals who are more than one generation below the transferor and to unrelated individuals who are more than 37.5 years younger. The GST tax ensures that at least one level of transfer tax is paid as property moves down family lines. Here’s how it works: What It Taxes The GST tax applies to three types of transfers: <ul> <li>Direct skips (e.g., a grandparent gifts or bequeaths assets directly to a grandchild)</li> <li>Taxable distributions (trust distributions to a skip person)</li> <li>Taxable terminations (when a trust’s nonskip beneficiary dies and only skip persons remain)</li> </ul> Understanding which transfers fall into these categories is the first step in spotting GST exposure before it becomes a costly surprise. Who Counts as a “Skip Person” <ul> <li>A grandchild or more remote descendant</li> <li>Any individual who is 37.5+ years younger than the transferor</li> <li>Certain trusts where all beneficiaries are skip persons</li> </ul> Skip-person status isn’t always intuitive (e.g., in blended families), so it’s important to confirm how the rules apply before making large transfers. GST Exemption Each person has a lifetime GST exemption ($13.99 million in 2025, which will increase in 2026 under the OBBBA to $15 million) that is paired with their federal estate and gift tax exemption. This means the same pool of exemption shields from taxation: <ul> <li>Lifetime gifts</li> <li>Transfers at death</li> <li>Generation-skipping transfers</li> </ul> When you use part of your exemption for gifting or estate tax purposes, you reduce the amount available to protect generation-skipping transfers, and vice versa. Only the value of transfers above the remaining exemption is subject to GST tax. GST Tax Rate <ul> <li>A flat 40 percent, in addition to any applicable estate or gift tax</li> </ul> Because a generation-skipping transfer may be subject to both the GST tax and the estate or gift tax, even a single misstep can result in a significantly higher overall tax bill. Nonportability Rule Unlike the estate and gift tax exemption, the GST exemption is not portable between spouses; each spouse must use it, or it is lost. Failing to use a spouse’s exemption is one of the most common—and most avoidable—GST planning mistakes. <h2>Historical Changes to the GST Tax (and What’s New for 2026)</h2> <a href="https://www.congress.gov/crs_external_products/IF/PDF/IF13053/IF13053.2.pdf">The GST tax</a> has been with us now for 50 years. During that time, it has undergone a series of changes through tax legislation, most recently in 2025’s OBBBA, with new rules set to take effect in 2026. <ul> <li>1976 — First generation-skipping tax enacted. Congress created the original GST system in the Tax Reform Act of 1976. It applied mainly to multigenerational trusts and proved too complicated to administer, leading to repeal and replacement.</li> <li>1986 — Modern GST tax established. Congress replaced the original GST tax with the current framework in the Tax Reform Act of 1986, expanding it to cover single-generation gifts and transfers and introducing the concepts of direct skips, taxable distributions, taxable terminations, and the unified GST exemption.</li> <li>2001 — Temporary exemption increases. The Economic Growth and Tax Relief Reconciliation Act of 2001 raised the estate, gift, and GST <a href="https://taxpolicycenter.org/briefing-book/how-do-estate-gift-and-generation-skipping-transfer-taxes-work">exemptions</a> and scheduled them to sunset.</li> <li>2012 — Exemption made permanent and indexed. The <a href="https://www.finance.senate.gov/download/2013/01/09/summary-of-the-american-taxpayer-relief-act-as-passed-1">American Taxpayer Relief Act of 2012</a> permanently unified the exemptions and set the GST rate at 40 percent.</li> <li>2017 — TCJA temporarily doubles transfer-tax exemptions through 2025. The Tax Cuts and Jobs Act (TCJA) sharply increased the estate, gift, and GST exemptions, but only on a temporary basis. These higher amounts were set to expire at the end of 2025, creating years of uncertainty for long-term planning.</li> <li>2025–2026 — OBBBA permanently increases the exemption. President Trump’s <a href="https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions">One Big Beautiful Bill Act</a> permanently increases the GST exemption to $15 million per individual beginning January 1, 2026, avoiding the scheduled anticipated drop to roughly $7 million. It also provides annual inflation indexing after 2026 and leaves the GST exemption nonportable.</li> </ul> A consistent legislative theme runs through this history: Congress periodically adjusts the exemption and structure of the GST tax, but the core purpose—ensuring at least one layer of transfer tax on multigenerational wealth transfers—has remained the same. Due to the high exemption amount, which gets even higher for 2026, only estates with very large values are affected. To put the number of households subject to the GST tax in perspective, only about 0.07 percent of decedents <a href="https://www.congress.gov/crs-product/R48183">pay the related federal estate tax</a>. <h2>Where GST Tax Problems Commonly Arise (and How to Avoid Them)</h2> New for 2026, the OBBBA gives the GST tax a rare degree of permanence. Unlike the TCJA, there’s no built-in sunset, and changing the exemption again would require Congress to pass new legislation. And unlike some other OBBBA tax provisions, GST tax changes drew relatively little debate, so most planners expect this framework to remain stable for the foreseeable future—making it all the more important to understand and apply the GST rules correctly under today’s law. Below are common areas where GST issues arise, paired with practical steps to prevent them. <h3>Failing to Allocate GST Exemption Properly</h3> What goes wrong: Sometimes a trust is funded with the expectation that the GST exemption will be allocated automatically. However, the rules don’t always treat each transfer as “automatic.” When no exemption is allocated, the trust becomes partially or fully subject to GST tax. Why it matters: This can turn routine distributions to grandchildren—or future generations—into taxable events. How to avoid it: <ul> <li>Confirm whether automatic allocation applies to each gift.</li> <li>Work with a planning professional to ensure your trust is set up as GST-exempt if that is the intent.</li> <li>Review older or multidonor trusts where exemption records may be incomplete.</li> </ul> <h3>Mixed Beneficiaries or Changing Family Structures</h3> What goes wrong: Blended families, step-grandchildren, adopted grandchildren, or later-in-life remarriages can affect who counts as a “skip person.” A beneficiary you assume isn’t skip-status may actually be treated as one under the age and relationship rules. Why it matters: Misclassifying a beneficiary can make an ordinary distribution unexpectedly taxable. How to avoid it: <ul> <li>Review your trust language when family structures change.</li> <li>Avoid generic terms like “issue” without clear definitions.</li> <li>Consult your attorney any time a new descendant joins the family through marriage or adoption.</li> </ul> <h3>Unintentional Skips Through Gifting or 529 Plans</h3> What goes wrong: Gifts made directly to grandchildren—including contributions to a grandchild’s 529 plan—can be treated as direct skips for GST purposes. Why it matters: The gift may require a GST exemption allocation or trigger GST tax if the exemption is already exhausted. How to avoid it: <ul> <li>Consider funding education through a GST-exempt trust rather than direct gifts.</li> <li>Use the five-year gift tax averaging rule carefully and coordinate GST allocations at the same time.</li> </ul> <h3>Taxable Terminations in Older or Nonexempt Trusts</h3> What goes wrong: A trust appears harmless for years while children are beneficiaries. But once a child dies and only grandchildren remain, the trust may experience a taxable termination, triggering GST tax all at once. Why it matters: This frequently comes as a surprise, especially for trusts created decades ago. How to avoid it: <ul> <li>Identify any existing trusts that were not made GST-exempt.</li> <li>Stress-test the trust terms against likely family scenarios.</li> <li>Add powers of appointment or other provisions that allow trust assets to be redirected if needed.</li> </ul> <h3>Large Gifts to Younger, Nonfamily Individuals</h3> What goes wrong: The GST tax applies not only to descendants but also to anyone more than 37.5 years younger than the transferor. Individuals such as caregivers, nieces/nephews/cousins once removed, or close family friends can fall into this category. Why it matters: A generous gift to a younger individual may accidentally qualify as a direct skip. How to avoid it: <ul> <li>Check the age difference before making large gifts.</li> <li>Consider structuring gifts through annual exclusions or non-GST-exempt trusts to manage exposure.</li> </ul> <h3>Losing a Spouse’s GST Exemption</h3> What goes wrong: Families may assume, incorrectly, that their unused GST exemption “rolls over” to the surviving spouse like the estate tax exemption does. Why it matters: GST exemption is not portable. If a spouse dies without using theirs, it’s gone forever. How to avoid it: <ul> <li>Use bypass trusts or other structures to capture each spouse’s exemption.</li> <li>Coordinate estate and GST planning rather than treating them separately.</li> </ul> <h3>Mixing Exempt and Nonexempt Assets in the Same Trust</h3> What goes wrong: Additional contributions made to an existing GST-exempt trust after 2026 may dilute the trust’s inclusion ratio and create a “mixed” trust—part exempt, part taxable. Why it matters: Mixed trusts complicate administration and can create unexpected tax exposure decades later. How to avoid it: <ul> <li>Avoid adding assets to a GST-exempt trust unless the gift will also be GST-exempt.</li> <li>If needed, create a separate trust for new contributions to keep inclusion ratios clean.</li> </ul> <h3>Choosing the Wrong State for Long-Term Trusts</h3> What goes wrong: Some states allow dynasty trusts to last indefinitely; others still enforce traditional Rule Against Perpetuities limits. Moving a trust or appointing a new trustee can unintentionally change the governing law. Why it matters: A trust meant to last for multiple generations may not legally be able to do so, undermining GST planning. How to avoid it: <ul> <li>Choose a trust jurisdiction intentionally.</li> <li>Build in <a href="https://www.elderlawanswers.com/what-is-a-trust-protector-and-when-might-you-need-one-7848">trust protector</a> provisions for flexibility.</li> <li>Review situs if trustees or beneficiaries relocate.</li> </ul> <h2>A Good Time to Revisit Your Estate Plan</h2> The OBBBA doesn’t just change the GST tax. It also updates several other tax rules that may affect how your estate plan works. That makes this an ideal time to look over your financial and legal documents and make sure your planning strategies fully incorporate today’s law. Even if the GST tax won’t apply to you, a quick review can catch other issues, such as outdated beneficiaries, old executors, or planning strategies built around rules from years ago. Changes in the law are a natural checkpoint, providing an opportunity to confirm that your plan still does what you expect it to do and protects the people you intend it to protect.

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In addition to any other rights and remedies at law or in equity, the Company reserves the right to terminate this Agreement and remove the Web Page without prior notice (a) if payment of the Listing Fee is Past Due; (b) if the Firm breaches any term or condition of this Agreement, provided, the Company shall use commercially reasonable efforts to notify the Firm of such removal and termination and in the case of a breach under clause (b), the Firm shall have fifteen (15) days from the date of such notice to cure the breach; and (c) if the Company determines based on feedback from consumers that the Firm or any of its listed attorneys does not meet the standard of practice desired of subscribers of the Website. "Past Due" means the annual Listing Fee (paid once a year or in 12 equal installments, once a month) is not received by the Company on or before the 30th day from which the payment is due. If a breach is cured to the satisfaction of the Company, in its sole discretion, the Company shall re list the Web Page and restore any suspended service in accordance with the terms of this Agreement. In case of a permanent removal of the Web Page and cancellation of this Agreement, the Company shall reimburse the Firm for any Listing Fees theretofore paid for the remainder of the current Term on a prorated basis. Other than as stated in the immediately preceding sentence, the Company does not give any refunds.

Provision of Services

The Company intends, but does not guarantee, that the Web Page will be operational 24 hours per day, 7 days per week, 365 days per year. The Website and Web Page may not be hosted on the Company's own servers, and the Company depends on a hosting service provider to keep the Website and Web Page operational. Notwithstanding anything to the contrary in this Agreement, the Company's obligation to keep the Website and Web Page operational is subject to the delivery and limited by the scope of hosting services provided to the Company by its hosting service. Interruptions in service demonstrably due to a failure of the Company's or its hosting service provider's web servers ("Interruptions") that last twenty-four (24) continuous hours or less will not be compensated. Interruptions that last more than twenty-four (24) continuous hours will result in an extension of the Term of this Agreement equal to the duration of the Interruption (the "Extension of Service") not to exceed 30 (thirty) days. AN EXTENSION OF SERVICE IS THE FIRM'S SOLE REMEDY FOR AN INTERRUPTION IN SERVICE, AT LAW AND IN EQUITY.

User Information

Any and all information provided by or collected from visitors of the Website and the Web Page (the "User Information") shall be owned solely by the Company, except that the User Information which is part of the text of an e-mail communication initiated on the Website or the Web Page, shall be treated as confidential and as protected by the attorney-client privilege between the user who initiated the e-mail and the Firm or attorney to whom it is addressed (the "Confidential Information"). User Information that would otherwise be deemed to be Confidential Information shall not qualify as Confidential Information if it is also provided to or collected by the Company in a manner other than as indicated above. The Company will neither collect, track nor store Confidential Information.

No Warranties

THE COMPANY DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY KIND AS TO ANY ASPECT OF THE WEBSITE, THE WEB PAGE, THE INFORMATION THEREIN AND ANY SERVICES PROVIDED UNDER THIS AGREEMENT, INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. THE COMPANY DOES NOT WARRANT THAT THE WEBSITE AND THE WEB PAGE WILL BE ONLINE UNINTERRUPTED, ERROR FREE OR COMPLETELY SECURE, AND WILL NOT BE LIABLE FOR THE CONSEQUENCES OF ANY INTERRUPTIONS, ERRORS OR BREACHES IN SECURITY. IN ADDITION, THE COMPANY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS AND WARRANTIES WITH RESPECT TO ANY SERVICES OR PRODUCTS OFFERED OR SOLD THROUGH THE WEBSITE.

Limitation Of Liability

IN NO EVENT WILL THE COMPANY BE LIABLE TO THE FIRM FOR LOSS OF PROFITS, LOSS OF REVENUES, LOSS OF SAVINGS, LOSS OF USE, LOSS OR CORRUPTION OF CONTENT, DATA OR INFORMATION OR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, WHETHER UNDER TORT, CONTRACT OR OTHER THEORIES OF RECOVERY. IN NO EVENT WILL THE COMPANY'S TOTAL LIABILITY ARISING OUT OF, CONNECTED WITH OR RESULTING FROM THIS AGREEMENT EXCEED THE AMOUNT PAID BY THE FIRM TO THE COMPANY UNDER THIS AGREEMENT FOR THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO THE CLAIM OF LIABILITY.

Indemnification

Each party will indemnify, defend and hold the other party harmless from and against any and all costs, liabilities, losses, damages and expenses, including reasonable attorney's fees, and amounts paid in settlement, resulting from or arising out of any claim, suit, action or proceeding brought against the other party as a consequence of the indemnifying party's infringement of any intellectual property right of a third party, including without limitation, any third party patent, copyright, trademark or trade secret. This indemnification is subject to the parties' limitation of liability under this Agreement.

Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey and shall be deemed to have been executed in Jersey City, New Jersey. Any legal action arising from or related to this Agreement shall be brought in any state or federal court located in the State of New Jersey, County of Hudson, and the parties hereby consent to the jurisdiction of such courts.

Entire Agreement

This Agreement is the entire Agreement between the parties with respect to the subject matter hereof.

Arbitration

Any disputes that arise between the parties with respect to the performance of this Agreement shall be submitted to binding arbitration in the State of New Jersey, County of Hudson by the American Arbitration Association, to be determined and resolved by said Association under its rules and procedures in effect at the time of submission and the judgment upon the award be entered in any court having jurisdiction thereof. The parties hereby agree to share equally in the costs of said arbitration except that in the discretion of the arbitrator, any award may include the cost of the party's counsel if the arbitrator expressly determines that the party against whom the award is entered has caused the dispute, controversy or claim to be submitted to arbitration as a frivolous or dilatory action.

Severability

Should any term, warrant, covenant, condition, or provision of this Agreement be held to be invalid or unenforceable, the balance of this Agreement shall remain in full force and shall stand as if the unenforceable part did not exist.

Validity

This Agreement is valid and enforceable against the Firm. Payment by the Firm to the Company, by check or electronic transaction, constitutes the Firm's execution and delivery of this Agreement.

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