In addition, gift splitting
allows a married couple to double their annual exclusions by making joint gifts to third parties for gift tax purposes.
Reviewing the trust document is particularly important, he said, as is the issue of gift splitting
, which may require filing two separate returns, one for the donor spouse and one for the non-donor spouse.
Even if only one spouse wants to make the double gift, that can be done with a process known as gift splitting
Election--The regulations provide great detail describing how mitigation operates where spouses have elected to gift split under I.
is a tax rule which allows married couples to split a total value as if each contributed half of the amount.
To keep the estate from growing, the initial advice was to gift $10,000 per child (now $12,000) and also use gift splitting
is an artificial mechanism: even if one spouse makes the entire gift, the single transfer is treated for tax computation purposes as though each spouse made only one-half of the gift.
David Pratt of Pratt & Bucher, LLP, spoke at the Greater Fort Lauderdale Tax Council meeting; his speech was entitled "The Anatomy of the New Federal Gift Tax Return, Including a Review of the Gift Tax Statute of Limitations, Gift Splitting
Provisions and Proposed Regulations Regarding the Election out of the Automatic Allocation of Generation-Skipping Transfer Tax Exemption.
These annual gifts, which can take the form of cash, stock, or other assets, are tax-free and need not be reported to the IRS, except in the case of gift splitting
, when a gift-tax return must be filed.
8 TABLE 2 Contrast of the Availability of Wealth Transfer Strategies by Married and Unmarried Couples (4) WEALTH TRANSFER STRATEGY MARRIED UNMARRIED Lifetime Exemption $1 M Unified Tax Credit X X Unlimited Transfer (Marital Deduction) X Annual Exclusion of $11,000 per Recipient X X Gift Splitting
X Intestacy Rules Favoring Partner/Spouse X Community Property X Living Trust X X Tax Free Gift of Income Interest to Spouse via QTIP X Unlimited Charitable Deduction X X Charitable Donations Through a CRAT X X Favourable Social Security and Qualified Plan Distributions After Death of Spouse/Partner X
It covers annual gift tax exclusion, exclusion for payment of tuition and medical expenses, gift splitting
, and tax return filing requirements.
is only available if both spouses are either citizens or residents of the United States.