Probate & Trust Law Section Conference Manual ... - Minnesota CLE

. In order to qualify for the $14,000, the gift must be “present interest,”
which generally means an outright, unrestricted gift directly to the
recipient or to a trust with “Crummey rights” to withdraw.
c. A married couple can give a combined amount of $28,000 per year to as
many people as they choose.
d. The annual exclusion amount increases based on inflation. The last
increase, from $13,000 to $14,000, occurred at the end of 2012/beginning
of 2013.
e. The donor can gift this amount to an unlimited number of people as long
as the amount paid to any one individual does not exceed $14,000 in the
calendar year.
3. 2013 Lifetime Gift Exclusion
a. Under Federal law, the amount a donor can give during his or her lifetime
in excess of the annual exclusion before gift tax is imposed
b. 2013 Lifetime Gift Exclusion Amount: the lifetime gift exclusion is tied
to the estate tax exclusion, meaning that a taxpayer can give up to a total
of $5,250,000, whether the transfers occur during the taxpayer’s lifetime
or at death.
c. For example, if the donor makes gifts of $3,000,000 during his or her
lifetime, then, under current law in 2013, only $2,250,000 will be exempt
from Federal estate taxes at death.
4. Other Exempt Gifts
a. Tuition paid directly to a qualified education institution does not need to
be reported, does not use one’s annual exclusion and does not use one’s
lifetime gift credit.
b. Payment of qualified medical expenses paid directly to the provider of the
medical services does not need to be reported, does not use one’s annual
exclusion and does not use one’s lifetime gift credit.
5. 2013 Filing Requirement
a. If the donor gave gifts in excess of $14,000 to any one person (other than a
spouse) in a calendar year, the donor must file a Form 709 gift tax return
to report the amount of gift exclusion used.
b. If the donor made gifts of future interests, of any amount, a Form 709 gift
tax return must be filed.
c. If one spouse made gifts in excess of $14,000 to any one or more persons
and the other spouse consents to apply his/her annual exclusion, a gift tax
return must be filed to split those gifts.
d. Form 709 Gift Tax Return is due on April 15 of the year following the
year the gifts were made, with the option to file a 6-month extension
e. If a gift tax is due, the donor is responsible for paying the tax, not the
recipient.
C. United States Generation-Skipping Transfer Tax (GST Tax)
1. Transfers made by a taxpayer during life or at death to or for the benefit of a
person two or more generations below the transferor or 37.5 years younger (“a
skip person”) than the transferor are subject to an additional GST Tax. IRC
§§2613 and 2651.
2