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
When Are New Jersey Business Owners Personally Liable for Corporate Debt?
New Jersey personal guaranty liability is a critical issue for business owners who regularly sign contracts on behalf of their companies. A recent New Jersey Supreme Court decision provides valuable guidance on when a business owner can be held personally responsible for a company’s debt. Under the Court’s decision in Extech Building Materials, Inc. v. […]
Author: Charles H. Friedrich
Commercial Real Estate Trends to Watch in 2026
Commercial real estate trends in 2026 are being shaped by shifting economic conditions, technological innovation, and evolving tenant demands. As the market adjusts to changing interest rates, capital flows, and workplace models, investors, owners, tenants, and developers must understand how these trends are influencing opportunities and risk in the year ahead. Overall Outlook for Commercial […]
Author: Michael J. Willner
One Big Beautiful Bill: New Tip Income Tax Rules Employers & Workers Need to Know
Part 2 – Tips Excluded from Income Certain employees and independent contractors may be eligible to deduct tips from their income for tax years 2025 through 2028 under provisions included in the One Big Beautiful Bill. The deduction is capped at $25,000 per year and begins to phase out at $150,000 of modified adjusted gross […]
Author: Scott H. Novak
One Big Beautiful Bill: New Overtime Tax Rules Employers and Employees Need to Know
Part 1 – Overtime Pay and Income Tax Treatment Overview This Firm Insights post summarizes one provision of the “One Big Beautiful Bill” related to the tax treatment of overtime compensation and related employer wage reporting obligations. Overtime Pay and Employee Tax Treatment The Fair Labor Standards Act (FLSA) generally requires that overtime be paid […]
Author: Scott H. Novak
New York’s FAIR Business Practices Act: What the New Consumer Protection Measure Means for Your Business
In 2025, New York enacted one of the most consequential updates to its consumer protection framework in decades. The Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Act) significantly expands the scope and strength of New York’s long-standing consumer protection statute, General Business Law § 349, and alters the compliance landscape for New York […]
Author: Dan Brecher
How to Reduce Legal Risk as Your New Jersey Business Grows in 2026
For many New Jersey businesses, growth is a primary objective for the New Year. However, it is important to recognize that growth involves both opportunity and risk. For example, business expansion often results in complex contracts, an increased workforce, new regulatory requirements, and heightened exposure to disputes. Without proactive planning, even routine growth can lead […]
Author: Ken Hollenbeck
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.