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- [CFP, Estate] 15, Splitting Gifts Between Spouses
[CFP, Estate] 15, Splitting Gifts Between Spouses
Turn one $19 k gift into $38 k—if you follow the rules.
🎯 Why This Topic Matters for the CFP Exam
Gift-splitting shows up in every exam cycle because it blends estate-planning theory with tax-return mechanics. Mastering it earns you points in both the Estate Planning and Tax Planning domains and helps you spot planning opportunities for real-world clients.
Key Stat for 2025: The annual exclusion is $19,000 per donor, so a married couple can shelter $38,000 per donee with a split-gift election. (irs.gov)
🧩 Main Concept Breakdown
🔑 Part | What You Must Know | Mini-Memory Cue |
---|---|---|
1️⃣ Annual Exclusion | $19 k per donor per donee in 2025. Indexes annually. | “19 = Open-hand 🎁” |
2️⃣ Gift-Splitting Election | Couples file Form 709 and both spouses sign to treat all gifts made by either spouse that year as half-and-half. | “Split = Sign Paper Lock-in Inclusive Total” |
3️⃣ Eligibility Rules | • Married at the time of each gift and at year-end | |
• Both U.S. citizens or residents | ||
• Election covers every gift that year (no cherry-picking) | “Must be Married & Mutual” 💍 | |
4️⃣ Mechanics | Each spouse reports half the value on separate Form 709s. No tax due if each half ≤ exclusion. | “Two 709s ➡️ Zero tax” 📝 |
5️⃣ Strategic Uses | • Double exclusion for large one-off gifts | |
• Front-load 529 plans (5-year averaging) | ||
• Shift assets out of taxable estate before 2026 TCJA sunset. | “🚀 Launch wealth early” |
📚 Deep Dive: Step-by-Step Example
Scenario: Pat (P) and Sam (S) want to gift $60,000 cash to their daughter Maya in 2025.
Without Gift-Splitting
P is the sole donor.Exclusion used: $19,000
Taxable gift: $41,000 (counts against P’s lifetime exemption).
With Gift-Splitting
Each spouse deemed to give $30,000.
Exclusion per spouse: $19,000
Taxable gift per spouse: $11,000
Tax shown on both Form 709s: $0, but each spouse’s lifetime exemption is reduced by $11,000.
Memory Hook: “30 each, 19 off the top, 11 goes on the clock.” ⏰
⚠️ Common Exam-Day Mistakes (avoid these!)
⚠️ Trap | Why It’s Wrong | Fix |
---|---|---|
“No return needed if the split wipes out tax.” | Both spouses must still file Form 709, even when net gift tax is zero. | Always file and sign! |
Splitting gifts of community property doesn’t require election. | Election is required for all property types—separate or community. | Check the box on Form 709 Part 1. |
Cherry-picking only the big gift to split. | IRS rules force the election to cover every gift either spouse made that year. | Track all gifts before electing. |
Forgetting GST implications. | Split gift counts half to each spouse’s GST exemption, too. | Allocate GST on each Form 709. |
Overlooking non-citizen spouse rule. | If one spouse isn’t a U.S. citizen/resident, gift-splitting isn’t allowed. | Confirm residency status first. |
🎶 Study-Session Boost
Pop on the free Spotify playlist “Financial Planning Essentials” while you drill practice questions—it’s curated for steady focus without lyrical distraction: https://open.spotify.com/playlist/6GUIZvnpaiOiYmXkanqwZ8 🎧
📝 Quick-Reference Table
Year | Annual Exclusion (Per Donor) | Max Per Donee w/ Split | Form 709 Required? |
---|---|---|---|
2024 | $18,000 | $36,000 | ✅ |
2025 | $19,000 | $38,000 | ✅ |
Tip: Adjust numbers each January; inflation updates often appear in the December CFP exam window.
🧠 Retention Hacks
Emoji Association: Picture two 💑 spouses turning one 🎁 into two 📦—that’s gift-splitting.
Acronym “SPLIT”:
Spouses
Paperwork (Form 709)
Legal marriage all year
Include all gifts
Twice the exclusionPractice Drill: Create three scenarios—cash, appreciated stock, and 529 lump-sum—then draft the corresponding Form 709 entries. The act of writing lines up with exam simulations.
🚀 Action Plan for the Week
Calculate split vs. non-split outcomes for at least five past exam problems.
Draft a mock Form 709 for a $120 k 529 contribution using five-year averaging + split.
Quiz yourself on the SPLIT acronym—write it from memory each morning.
Listen to 30-minute blocks of the Financial Planning Essentials playlist to cement recall.
Stick to this micro-plan and the next time you see a gift-splitting question, you’ll answer in under one minute—leaving extra brain fuel for the tougher Estate vs. GST allocation items.
🌟 Final Takeaway
Gift-splitting is simple math wrapped in strict paperwork. Respect the rules, file the forms, and you’ve doubled your clients’ (and your exam) advantage.