property settlements pursuant to a divorce do not require filing a gift tax return. Sec. 2516 applies only to payments and transfers made pursuant to a written agreement that resolves the divorcing spouses’ marital and property rights or provides for the support of minor children. Sec. 2516 provides that the transfers will be deemed to be made for full and adequate consideration, which negates the gift.
1) Should we do it as a 2 step process where one of us gives away their half to the other spouse?
the divorce decree will specify what is to happen to the house. this may require nothing more than the spouse that is losing their ownership interest taking their name off the title. However, the spouse that may no longer own the house will still be liable for any debt secured by the property.
2) Can we do it as a 1-step process where we both write off the house to our son?
I suppose both of you can gift the house to your son before the divorce is final but that would constitute a gift (so would gifting after the divorce but then only the owner would be making the gift) requiring a gift tax return. there would also be issues if there is a mortgage or other debt secured by the property. many have a due on sale clause and gifting under state law may be deemed a sale making the entire balance due
3) How to transfer the house to our son? Should we first put it in a trust or can we just go to the title company and make this transfer?
4) Should we transfer to our son before or after or during the divorce?
5) I have been submitting 709 for cash support (not split) to our son
not knowing anything about your son, I can't say that filing a gift tax return is needed for providing support since that may be a parental obligation removing it from the definition of a gift
it would seem that you are not using and have not consulted a lawyer in these matters. doing so would be advisable. they can dig in the details they believe are necessary to give proper advice based on state and federal laws
