IRC 2513 Gift-Splitting Rules: Identifying Gifts Requiring Non-Pro Rata Allocations

Form 709 Reporting Gifts to Trusts With Non-Gifting Spouse Beneficiaries, Valuing Remainder Interests, and Splitting Strategies

A live 110-minute CPE webinar with interactive Q&A


Wednesday, September 13, 2017
1:00pm-2:50pm EDT, 10:00am-11:50am PDT


This webinar will provide tax advisers and compliance professionals with a practical, beyond the basics guide to the Section 2513 “gift-splitting rules.” The panel will offer practical and detailed guidance on applying the rules to client situations involving GRATs, Crummey Trusts, and other vehicles that do not automatically permit an equal division of the gift tax exemption amount. The panel will describe available elections, detail necessary calculations, and illustrate proper reporting of split gifts on Form 709.

Description

IRS Form 709 Gift (And Generation Skipping Tax) Return is one of the more complex of all commonly encountered tax filings. For many taxpayers and even some advisers, simply determining whether a transfer qualifies as a reportable gift is a challenge. Even tax professionals with experience in preparing the form can be stumped by the more complicated aspects of reporting these transfers.

One of the most difficult tests is navigating the gift-splitting rules of Section 2513. The rules allow a married couple to treat the total value of a gift as split between them, increasing their total gift tax exemption. In instances of gifts to individuals, the gift-splitting rules are straightforward in operation; however, when gifts are made to certain trust vehicles, the application does not always allow an equal split.

If a spouse makes a gift to a non-zeroed-out GRAT in which the spouse is a beneficiary of the remainder interest, the gift-splitting election will only be effective to the extent that the non-spouse beneficiaries’ interest is ascertainable and severable from the interest given to the spouse at the time of the gift.

Gifts to some trusts, such as irrevocable life insurance trusts, that feature Crummey powers also present challenges in navigating the gift-splitting rules. Tax advisers completing fiduciary returns must understand the specifics of the gift-splitting rules to avoid costly tax consequences.

Listen as our experienced panel provides a thorough and practical guide to the complexities of gift-splitting rule elections, calculations, and tax reporting on Form 709.

Outline

  1. Section 2513 Gift-Splitting default rules
    1. ’All-or-nothing” rule on gift splitting
    2. Consent issues
    3. Impact of powers of appointment
    4. Valuation of remainder interests
  2. Gift-splitting treatment of gifts to trusts where non-donor spouse has remainder interests
  3. Crummey Trusts
  4. Calculations of split gifts where the allocation is other than pro rata between gifting and non-gifting spouse
  5. Reporting unequal gift splits on Form 709

Benefits

The panel will discuss these and other issues:

  • Under what gift scenarios would gift splitting generate a negative impact on the nongrantor spouse?
  • What is the impact of a non-donor spouse having a Crummey power in an irrevocable trust on gift-splitting calculations and exemption allocations?
  • Recognizing and calculating gift splits when the required allocation differs from a pro rata division
  • Identifying when a remainder interest is “ascertainable and severable”

Learning Objectives

After completing this course, you will be able to:

  • Recognize gift scenarios where the gift-splitting rules require a non pro rata allocation
  • Identify the impact of Crummey powers on gift-splitting allocations
  • Discern when taxpayers should not elect gift splitting under Section 2513 provisions
  • Determine how to calculate non pro rata gift-spliting allocations and report on Form 709

Faculty

Christiana M. Lazo, Counsel
Ropes & Gray, New York

Ms. Lazo’s practice consists of representing ultra-high net worth individuals, their family offices, and closely held businesses in developing and implementing sophisticated domestic and international tax and estate plans. She has significant experience counseling global clients on inbound and outbound planning, particularly advising families with members in multiple jurisdictions on wealth transfers and on tax-efficient investment and business ownership structures.

Bruce D. Steiner
Kleinberg Kaplan Wolff & Cohen, New York

Mr. Steiner has over 35 years of experience in the areas of taxation, estate planning, business succession planning and estate and trust administration. He is a frequent lecturer at continuing education programs for bar associations, CPAs and other professionals. He also writes for, and has been quoted in numerous publications on trust, estate, probate, and tax matters. Mr. Steiner was named a New York Super Lawyer in 2010 through 2016. He is admitted to the New York, New Jersey and Florida bars.

Diana S.C. Zeydel, Shareholder
Greenberg Traurig, Miami

Ms. Zeydel is the National Chair of the firm’s Trusts and Estates practice, and she focuses on estate, trust and tax planning for high net worth individuals and families. Her practice includes planning for U.S. and non-U.S. citizens and residents, and she specializes in sophisticated intra-generational wealth transfer strategies and business succession planning. She assists clients in litigated probate, trust and guardianship matters, and represents clients before the Internal Revenue Service in matters involving complex fiduciary income tax and estate, gift and generation-skipping transfer tax matters.


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Live Webinar $147.00

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Continuing Professional Education credit processing is available for an additional fee. CPE processing must be ordered prior to the event. To qualify for CPE you may not listen via the telephone.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of gift tax reporting requirements, specific knowledge of generation-skipping tax rules; familiarity with gift tax lifetime exclusions, familiarity with rules covering allocation of GST exemptions.

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