Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Spouses Should Be Aware of 'Gift-Splitting' Criteria when Gifting Assets
Author: Scarinci Hollenbeck, LLC
Date: August 26, 2013
Key Contacts
Back
Lawmakers’ decision to both set the estate tax at $5.25 million for 2013 and increase the annual gift tax to $14,000 has been a welcomed sigh of relief for many affluent individuals and business owners. The gift tax, in particular, has historically been a key strategy Americans have used to transfer wealth to future generations and lower their taxable estate or tax liability.
Couples who file jointly have the added advantage of doubling the amount they can gift to individuals at a tax-free rate, enabling them to extend $28,000 in cash or assets to loved ones. However, when one spouse chooses to extend a gift to another person, a scenario known as “gift-splitting” should be discussed to help them avoid federal gift taxes. Gift-splitting works as follows: If an individual or their spouse makes a gift to someone else, that gift can be considered for tax purposes as having been made half by the gifter and half by his or her spouse.
However, the IRS dictates that both individuals must agree to split the gift. This means that either spouse or the couple together could make a gift of up to $28,000 to any person and not be subject to the gift tax, so long as they both agree to it. If they do, they can each can take the annual exclusion for their part of the gift. However, the tax agency also notes that if they split the gift they made, they must file a gift-tax return to show that the individual and their spouse agrees to use gift splitting. The filing requirement is the case even if half of the split gift is less than the annual exclusion.
When gifting large amounts to children or other beneficiaries and utilizing the gift-splitting rule, it may be helpful for spouses to speak with a tax professional to understand their obligations.
- Practices: Tax and Trusts & Estates, Sophisticated Estate Planning & Wealth Preservation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Author: George McGowan
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Author: George McGowan
How to Effectively Use Contracts to Manage Risk
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Author: George McGowan
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
How Can Trusts Be Used in Business Succession?
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.