Gifting Index Funds - Tax Implications Questions Follow-Up

[randomperson5]

Hello again! Thanks again to the community here for the guidance so far in my previous post (linked for reference, but overall asking about tax implications for gifting a relatively large amount of funds to my fiancée via in-kind transfer of index fund shares): https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-gifting-index-funds-tax-impli...

There was a lot of very helpful guidance, particularly on cost basis and I think we'll be moving forward with using Specification ID via Vanguard in-kind transfer for the most flexibility and tax optimization in the future.

The other helpful feedback was that there would not be tax implications other than debits to the lifetime gift tax exclusion total unless it was a transfer to a spouse. We are planning to get married next year so I was wondering if I would still need to file Form 709 and debit from my lifetime gift tax credit if I were to execute the gift next year, but just prior to the actual date of marriage? For example, if I was to execute the transfer/gift in January 2025 and become legally married in February 2025, would the gift still count towards my lifetime gift tax exclusion?

Thank you all again in advance for the help!

[tagteam]

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@randomperson5 wrote:

.......I was wondering if I would still need to file Form 709 and debit from my lifetime gift tax credit if I were to execute the gift next year, but just prior to the actual date of marriage?

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You may get away with this entirely since the Form 709 is filed on a calendar year basis but your fiance would still not be your spouse at the time of the transfer.

The problem with the foregoing is that you will have to report the date of the transfer on Form 709, a date when you will not yet be married and able to claim your fiance as your actual spouse.

I am unclear as to why you are unable to wait until after you are married to effect this transaction.

[randomperson5]

We wanted to complete the gifting transaction before the date of marriage to have a clear separation of pre-marital assets. If I were to make the gift after the date of marriage, it may not be considered pre-marital assets in the case of a divorce. 

[tagteam]

An attorney could draft an agreement, however.

Regardless, you have to report the date of the transaction on Form 709 so that would present an issue.