Spousal Gift Trusts

A gift trust established for a spouse can receive gifts that either use the $1 million lifetime exemption or use the annual exclusion. This is a way to utilize exemptions now without having to give assets outside of the marital unit. The annual exclusion to a spouse is a freebie most taxpayers miss.

What is Gift-Splitting?

Oddly enough, married individuals can combine their annual exclusions and this is called “gift splitting”.  For example, if you are married and have 3 children, you and your spouse can jointly give each child up to $26,000 each year. It doesn’t matter from whose assets the gift is made. If you give one child money or property that exceeds your individual annual exclusion of $13,000 and your spouse consents to the split, on the federal gift tax return, then both your spouse’s annual exclusion and yours can be applied and no gift tax will be due.