How to Increase Your Gift Tax Exclusion

There are several ways that you can double up on your gift-tax maximum. Acting now is beneficial because the lifetime exemption and annual gift tax exclusion are both still generous. Married couples can double up on gift tax breaks. The husband could give up to $13,000 to each of two children from the marriage and his wife could also give up to $13,000 to each of those children. All of those gifts would be tax-free because of the annual gift tax exclusion.

It might not be that easy if one partner has a good amount of assets and the other partner only has a few assets or if the partners are in a second marriage and one partner has no interest in giving the two children big money. In these situations, the partners can employ gift splitting which allows a spouse effectively use his/her gift allowance and his/her spouse’s allowance combined. To split gifts though, the spouse getting to use both exemptions has to file a gift tax return that is signed by his/her spouse indicating his/her consent to giving up his/her exemption. The major stipulation of gift splitting is that all gifts made during the year to third parties must be split.

See Donald Jay Korn, Tip For Doubling Your Annual Gift-Tax Maximum, Investor’s Business Daily, Jan. 6, 2012. 

Special thanks to Jim Hillhouse (Professional Legal Marketing  (PLM, Inc.)) for bringing this article to my attention.