Gift amount from a joint trust

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fallon825
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Gift amount from a joint trust

Post by fallon825 »

My spouse and I are setting up a joint trust. Can we still gift our children $30,000 ($15,000 per parent), even if all our assets are in the joint trust? In other words, will the creation of the joint trust limit the gift amount to $15,000? Thanks!
Gill
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Re: Gift amount from a joint trust

Post by Gill »

No, you still each have an annual exclusion of $15,000. The trust has no effect.
Gill
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afan
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Re: Gift amount from a joint trust

Post by afan »

I assume the joint trust is revocable so the gift would be treated as coming from the grantor, not from the trust?

Would the answer be different if parents created an irrevocable trust and made distributions to the kids from that? The gift tax issues would arise when the trust was funded, correct?
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Topic Author
fallon825
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Re: Gift amount from a joint trust

Post by fallon825 »

Thanks Gill!
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Lee_WSP
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Re: Gift amount from a joint trust

Post by Lee_WSP »

afan wrote: Wed Apr 21, 2021 4:24 pm Would the answer be different if parents created an irrevocable trust and made distributions to the kids from that?
The exclusion is applicable to an individual. If parents as trustee gifted money in the trust, they’re gifting someone else’s money. In other words, can’t say without additional information.
The gift tax issues would arise when the trust was funded, correct?
Yes, since an irrevocable trust involves an irrevocable transfer.
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celia
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Re: Gift amount from a joint trust

Post by celia »

If we’re talking about a living trust, this is the same as the trust holding a checking account. One person could write a check for 30,000 or each of them could write a check for 15,000.
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fallon825
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Re: Gift amount from a joint trust

Post by fallon825 »

A follow up question - can the gift be deposited into the child's checking account if I am also named on his checking account?
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HueyLD
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Re: Gift amount from a joint trust

Post by HueyLD »

celia wrote: Wed Apr 21, 2021 6:50 pm If we’re talking about a living trust, this is the same as the trust holding a checking account. One person could write a check for 30,000 or each of them could write a check for 15,000.
A check from a separate property checking account is not a gift from both (without an agreement to gift split, which will never happen).

When they opened a joint trust, they put their community property as well as their separate property into the trust. Separate property placed into a joint trust is still separate property, and a check written on a separate checking account from within the trust is not a gift from both of them.

Why do people put separate property into a joint trust? Because they want their property to pass to their children, the beneficiaries of the trust. When one dies, half of the community property and all of their separate property will go their children.

In California, A and B don’t need three trusts, as one trust can hold both their community property and their separate property.
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Lee_WSP
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Re: Gift amount from a joint trust

Post by Lee_WSP »

HueyLD wrote: Thu Apr 22, 2021 7:54 am Separate property placed into a joint trust is still separate property,
Only if you’re able to distinguish the two and you didn’t commingle the property or arguably mean to. Probably not a great idea if you really want to keep it separate.
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