I've read countless documents regarding gifts to a spouse and ALMOST everyone of them says that one can give limitless gifts to a spouse without any gift taxes being incurred. However, I recently ran into Form 709 and its instructions. Form 709 is apparently to Gifts what the 1040 is to Income.
I am simply adding my wife to the Grant Deed on our home that I bought long before I met her and we later got married. The lawyer that put this together wrote it up as a Gift. Basically I am deeding the home from just me as a single man (my status when the last deed was written) to both me and my wife as a married man and a married woman.
And it all seems like a non-issue as far as gift taxes are concerned that there are none if I Gift property to my wife. That is until I saw this terrible paragraph in the Instructions for Form 709. On page 2 of the Instructions for Form 709, there is the following,
"Gifts to your spouse... You must file a gift
tax return if you made any gift to your
spouse of a terminable interest that does
not meet the exception described in Life
estate with power of appointment..."
Can anyone say what that is??? "Terminable" is related to "terminate" and when I looked for what this might mean in the sense intended here, I found words that spoke of "having strings attached". But what does that mean??? And the part about "Life estate with power of appointment" isn't defined anywhere else in this document at all.
Getting hit with Gift taxes on this transfer could cost us hundreds of thousands of dollars so I have to understand what this strange paragraph means. I had never even heard of form 709 until a couple days ago and I thought the Gifts to Spouse deal was easy. But now???!!! Can anyone offer any help on what the above means??
thanks... bob..
