Gift Tax Exclusion - MFS w/ bankruptcy

Technical topics regarding tax preparation.
#1
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Virginia
Have a couple who have filed MFS for decades. They're now looking to start gifting away some of their estate and would like to go up to the $30k per recipient limit. A few possible difficulties:

1) The husband holds virtually all of the assets. They have kept all of their finances separate
2) The wife is currently going through a personal bankruptcy filing

My understanding has always been that it the exclusion is per person, with married spouses each giving separate gifts of $15k. Not that it just doubles for married couples, especially if they are MFS.

But in this case the wife holds no assets to gift. And I am not basing this off of experience, but I somehow doubt the bankruptcy court would look favorably on the husband transferring assets to the wife for her to immediately gift them away.

Two questions:

1) Are they better off just gifting $15k/year for now until the bankruptcy is finalized?
2) Once the bankruptcy is over, what is the best procedure for the wife to use her exclusion? Would the husband need to "gift" the money to her first? That seems odd given the nature of a martial estate, but perhaps that is how it is done

Thanks as always. You guys are amazing.
 

#2
Doug M  
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Oregon
I see no purpose at all to make any gifts at this time. Federal limit for $11 million + per spouse and no estate tax in Virginia. I would not even transfer the $15k unless there are other issues not discussed.

Would the husband need to "gift" the money to her first?


Wife can consent to spousal gift.

You can always gift more down the road than the $30k with no issues.
 

#3
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Virginia
They're wanting to make these gifts to certain people anyways, avoiding estate tax is not the primary goal. They just want to keep it under the $30k limit to avoid the additional paperwork. And while it is very unlikely their estate will reach the current threshold, it is not completely out of the realm of possibility given its current size and their ages.
 

#4
Nilodop  
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What's the additional paperwork?
 

#5
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Just the 709
 


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