Question

Bill and his wife Nadine are worth $33 Million. All of their property is community. They think they need to start transferring property to their three children, ages 11, 8, and 6. Bill and Nadine read an article in Fortune magazine that said each could give $15,000 per year to each child. So they did a little math and decided they could jointly give $30,000 to each child, or $90,000 per year in total. The article said this did not otherwise affect what they could transfer at death or during life and that no tax filings were required. Explain what they must do in order for their conclusion of $30,000 to each child with no tax filings or use of their unified credit to be true.

EXPLAIN THE ISSUE – THAT IS, THE PROBLEM

GIVE AT LEAST ONE SUGGESTION FOR THE STRUCTURE OF THEIR GIFTS

Answer 1

When any property is given to anyone other than your spouse valued more than $15,000($30,000 per couple) in any one year, you have to file gift tax form.

HenceBill and his wife Nadine can together give $30,000/ year per child without filing any gift tax return.

However in a life time a person can transfer $11.2mn ( $22.4mn per couple).

The problem here is the community property is worth $33mn which is much above the exempted limit. So the suggestion would be to transfer $30000/per child together per year and also to bear the eduxeducati expenses of the kids from the community property itself , as educational expenses are not considered as gift and hence not taxable.