If I name nieces and nephews in my will and do not designate my brother to inherit, is this considered skipping a generation? Is this generation skipping tax penalty law still valid?

I'm Canajun, so don't know. But here we have a tax information line (1-800) where you can talk (eventually) to a human being and get an answer to any tax question. Or if you go on our federal tax website, you can order pamphlets that deal with particular questions. I'm sure there's an American counterpart.

This site looks promising, for your purposes.

In Canada we don't pay tax on inheritances. But if we invest an inheritance, we pay tax on the interest.

If you omit a spouse or a child from your will, it may be possible for them to successfully contest the will. Some states even require leaving a specific amount or portion to one or both. The way around that is to leave them a nominal amount. (If there are hard feelings in life, doing this is the best way to get the last word in. ) Another thing to remember is that the proceeds from life insurance are not part of an estate unless specifically designated so, or the beneficiary has predeceased the insured. If you want to leave money to your brother's children, buying a life insurance policy and naming them as beneficiaries gets around a lot of things.

According to this website (Scroll to almost the bottom of the page)

"A generation-skipping credit tax is imposed on every generation-skipping transfer which consists in whole or in part of property having a tax situs within the state of Missouri. The Missouri generation-skipping credit tax shall be the maximum credit for state death taxes allowed by Internal Revenue Code, section 2604."

Such things as this can be a legal minefield, and I would always advise anyone to seek legal advice.