Spouses Should Be Aware of ‘Gift-Splitting’ Criteria when Gifting Assets


Spouses Should Be Aware of ‘Gift-Splitting’ Criteria when Gifting Assets

by Frank L. Brunetti on August 26, 2013

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.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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