Gift Splitting Question-Which Account to Use?

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MarkerFM
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Gift Splitting Question-Which Account to Use?

Post by MarkerFM » Wed Mar 25, 2020 7:06 am

I have a question about gift splitting. My wife and I each intend to give each of our children $15,000 a year but her taxable accounts do not generally maintain that amount of cash. We want to avoid filing Form 709 to elect gift splitting.

The easiest way for her to make the gifts without having cash would be for me to transfer the money from my brokerage account to a checking account that is "hers". However, while that account uses her SSN, and is used only by her, it is legally a joint account (JWROSTOD). Should we not use that account to make her gifts? The alternative would be for me to transfer funds from my brokerage account to her brokerage account and then from her brokerage account to the gift trust accounts, but since that cannot be done online, it is more cumbersome.

Silk McCue
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Re: Gift Splitting Question-Which Account to Use?

Post by Silk McCue » Wed Mar 25, 2020 7:14 am

A number of prior threads on this topic. The one below has two replies from Alan S. (resident expert) and they may answer your question.

viewtopic.php?t=79381

Cheers

Topic Author
MarkerFM
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Re: Gift Splitting Question-Which Account to Use?

Post by MarkerFM » Wed Mar 25, 2020 11:48 am

Does anyone else want to weigh in on this? The original question in the thread referenced just above has been removed.

bsteiner
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Re: Gift Splitting Question-Which Account to Use?

Post by bsteiner » Wed Mar 25, 2020 1:35 pm

It depends. In most states, a joint account belongs to the one who put in the money (though the bank is protected if it pays to either one or follows the instructions of either one). But in New York, a joint account is presumed to belong to the parties equally.

Topic Author
MarkerFM
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Re: Gift Splitting Question-Which Account to Use?

Post by MarkerFM » Wed Mar 25, 2020 4:19 pm

bsteiner wrote:
Wed Mar 25, 2020 1:35 pm
It depends. In most states, a joint account belongs to the one who put in the money (though the bank is protected if it pays to either one or follows the instructions of either one). But in New York, a joint account is presumed to belong to the parties equally.
Thanks, this is Florida.

JonnyB
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Re: Gift Splitting Question-Which Account to Use?

Post by JonnyB » Wed Mar 25, 2020 4:32 pm

I don't know anyone who worries about this. It could become an issue if you are divorced, but otherwise no big deal.

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CyberBob
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Re: Gift Splitting Question-Which Account to Use?

Post by CyberBob » Wed Mar 25, 2020 5:10 pm

MarkerFM wrote:
Wed Mar 25, 2020 11:48 am
Does anyone else want to weigh in on this? The original question in the thread referenced just above has been removed.
If it helps, here's the archive of that original post:
I've literally read/heard about the gift tax exclusion hundreds of times over the last 20 or 30 years, and the article never fails to mention the doubling of the annual exclusion for couples. Only TODAY I am learning about the term "gift splitting" and the existence of Form 709.

[which really says something about the competence of financial columnists/media talking heads. They just parrot conventional wisdom and probably know less than the typical person on these boards.]

Anyway, so I went ahead and read the instructions for Form 709, and it's still not perfectly clear on the particular point of joint accounts. Let's say a 20k check was written on a joint account containing purely marital assets. Would the form be necessary? Any community property by definition is owned 1/2 by each spouse, so the check certainly would be too - i.e. it would be as good as if 2 checks were written from separate asset accounts.

Secondly, what happens if you just ignore filing in this case? Who would ever really know/care? I.e. let's say the parents die 30 years from now. Who would even know about the 20k check and whether it was split or not?

Finally, since I mentioned it, who would really know about the annual limit at all? Let's say you wrote 100k check this year. In 30 years when you die, how would anyone be able to track it back to apply against your lifetime cap? I have always wondered about that, even while fastidiously observing the annual cap.

thanks.

fourwheelcycle
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Re: Gift Splitting Question-Which Account to Use?

Post by fourwheelcycle » Wed Mar 25, 2020 6:58 pm

I can see why the original post was deleted.

My wife and I make our gifts from our joint revocable trust account at Vanguard. If we are under $30K we do not file any Form 709s. If we are over $30K we file two Form 709s.

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