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This page contains a single entry by Associate Editor - 2 published on October 3, 2012 2:06 PM.

COME FOR THE EXCLUSION, STAY FOR THE INTEREST RATE was the previous entry in this blog.

Guidance Just Issued From New York Regarding Federal Portability...No "706 Lite" for New York Estates and IRS Posts Revised Draft 2012 Gift Tax Return is the next entry in this blog.

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IRS Posts Draft 2012 Gift Tax Return (Form 709)

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IRS Posts Draft 2012 Gift Tax Return (Form 709)


Managing Director & Head of Wealth Advisory
Lazard Wealth Management LLC



On September 18, the IRS posted a draft 2012 Gift Tax Return.

The New Draft Form 709 

There is a new line in Part 1 (Line 19), which asks: 

"Have you applied a DSUE amount received from a predeceased spouse to a gift or gifts reported on this or a previous Form 709?" 

If the answer is yes, there is a box to check and a direction to complete new Schedule C - Deceased Spousal Unused Exclusion (DSUE) Amount. 

The tax computation (line 7 of Part 2) now refers to the maximum applicable credit amount (formerly unified credit amount), which factors in any DSUE amount from a predeceased spouse, computed on the new Schedule C. 
  
Schedule C is for reporting the DSUE amount received from a last deceased spouse, as well as the DSUE received from other predeceased spouse(s) and used by the donor. 

Although there are several references to "see instructions" on the draft form, the instructions have not yet been issued. 

Act Now? 

Using the DSUE during the lifetime of the surviving spouse may make good sense given: 
    • If the surviving spouse remarries and the next spouse dies, any remaining DSUE of the first surviving spouse will be lost, even if the last deceased spouse has no or a smaller amount of DSUE than the prior spouse;
    • When the surviving spouse makes a gift, the DSUE of the last deceased spouse is applied before the surviving spouse's own exclusion amount;
    • A spouse who has had more than one predeceased spouse can use the DSUE of each surviving spouse in succession, as long as the DSUE of the last deceased spouse is used before any subsequent spouse dies.  There is no recapture of previously gifted amounts in which the DSUE of a prior deceased spouse was utilized.  In fact, the surviving spouse can include in her applicable exclusion amount the DSUE amount of her most recently deceased spouse, even if she is then married to another individual.  If the second marriage ends in divorce and the divorced spouse dies, the first predeceased spouse remains the last predeceased spouse for DSUE purposes. The divorced spouse is not considered the last predeceased spouse because he was not married to the surviving spouse at death; and
    • The last deceased spouse is identified as of the date of a taxable gift by the surviving spouse.  

For your information, a link to the draft Form 709 is included below:  




ABOUT LAZARD WEALTH MANAGEMENT

Lazard Wealth Management is part of Lazard, one of the world's preeminent financial advisory and asset management firms. With origins dating back to 1848, Lazard operates from 42 cities across 27 countries in North America, Europe, Aia, Australia, Central and South America. Lazard Wealth Management takes an innovative and preservation-based approach to wealth management in servicing wealthy individuals, families and foundations. We provide a highly tailored suite of advisory and investment services, integrated across disciplines to deliver a breadth of solutions to clients' complex financial and strategic challenges. 

For more information on Lazard Wealth Management, please visit http://www.lazardwm.com.

Copyright @ 2012.  All rights reserved.

IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, please be advised that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. 

This material is written by Lazard Wealth Management LLC for general informational purposes only and does not represent our legal advice as to any particular set of facts and does not convey legal, accounting, tax or other professional advice of any kind; nor does it represent any undertaking to keep recipients advised of all relevant legal and regulatory developments.  The application and impact of relevant laws will vary from jurisdiction to jurisdiction and should be based on information from professional advisors.  Information and opinions presented have been obtained or derived from sources believed by Lazard Wealth Management LLC to be reliable.  Lazard Wealth Management LLC makes no representation as to their accuracy or completeness.  All opinions expressed herein are as of the date of this presentation and are subject to change.