The Tax Court held that a husband and wife each could claim
annual exclusions for gifts made to a family trust because it qualified as a Crummey trust.
The court explained that despite following this general rule, the IRS has stated that it will challenge
annual exclusions if there was a prearranged understanding that the withdrawal right will not be exercised or that doing so would result in adverse consequences to its holder (e.
151) The taxpayer then claimed
annual exclusions based on the withdrawal rights.
The grantor also allocates gift-tax
annual exclusions, applicable lifetime gift exemption and generation-skipping exemption on the Form 709 U.
Form 709 is filed separately by each spouse and allows them to treat half of their spouse's gifts of separate property as their own to maximize the use of
annual exclusions (S13,000 per donee for a gill of a present interest).
Tax liability was calculated after making adjustments for
annual exclusions, the marital deduction, and charitable deductions.
2gm) Split gifts allow spouses to, in effect, utilize each other's
annual exclusions and exemptions (see Q 7577).
Thus, married couples effectively have
annual exclusions up to $26,000 per recipient to an unlimited number of recipients this year.
71) The extent to which state gift statutes resemble the federal gift tax vary greatly and hinge on issues such as lifetime exemption amounts and
annual exclusions (see Appendix F).
Where the value of a policy exceeds the
annual exclusion, the insurance company may consent to split it into two or more smaller policies; by giving the donee one policy in each of several succeeding years, the entire value can fall within the
annual exclusions.
And what's more, he and his wife Mary could combine their
annual exclusions to double the amount to $480,000 to their family, gift-tax free.
Their estate plan already takes advantage of the gift and estate tax exemptions and
annual exclusions, but the Diedrichs would like to transfer more to their heirs without incurring gift taxes.
