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Gifts to Donees Other Than Your

report the gift on Form 709 because you

any other arrangement (other than an

gave the present interest to a donee other

estate) that although not explicitly a trust,

Spouse

than your spouse, then you should enter

has substantially the same effect as a

You must always enter all gifts of future

the entire gift, including the future interest

trust. For example, trust includes life

interests that you made during the

given to your spouse, on Schedule A.

estates with remainders, terms for years,

calendar year regardless of their value.

You should use the rules under Gifts

and insurance and annuity contracts. A

If you do not elect gift splitting. If the

Subject to Both Gift and GST Taxes,

transfer of property that is conditional on

total gifts of present interests to any

below, to determine whether to enter the

the occurrence of an event is a transfer in

donee are more than $10,000 in the

gift on Schedule A, Part 1 or Part 2.

trust.

calendar year, then you must enter all

Non-U.S. citizen spouse donee. If your

Interest in Property

such gifts that you made during the year

spouse is not a U.S. citizen and you gave

to or on behalf of that donee, including

him or her a gift of a future interest, you

If a gift is made to a “natural person,” it is

those gifts that will be excluded under the

must report on Schedule A all gifts to your

always considered a gift of an interest in

annual exclusion. If the total is $10,000

spouse for the year. If all gifts to your

property for purposes of the GST tax.

or less, you need not enter on Schedule

spouse were present interests, do not

If a gift is made to a trust, a natural

A any gifts (except gifts of future interests)

report on Schedule A any gifts to your

person will have an interest in the

that you made to that donee.

spouse if the total of such gifts for the

property transferred to the trust if that

If you elect gift splitting. Enter on

year does not exceed $103,000 and all

person either has a present right to

Schedule A the entire value of every gift

gifts in excess of $10,000 would qualify

receive income or corpus from the trust

you made during the calendar year while

for a marital deduction if your spouse

(such as an income interest for life) or is

you were married, even if the gift's value

were a U.S. citizen (see the instructions

a permissible current recipient of income

will be less than $10,000 after it is split

for Schedule A, Part 3, line 8, on page 9).

or corpus from the trust (e.g., possesses

on line 2 of Part 3.

If the gifts exceed $103,000, you must

a general power of appointment).

report all of the gifts even though some

Gifts to Your Spouse

Skip Person

may be excluded.

You do not need to enter any of your gifts

A donee who is a natural person is a skip

to your spouse on Schedule A unless you

Gifts Subject to Both Gift and

person if that donee is assigned to a

gave a gift of a terminable interest to your

GST Taxes

generation that is two or more generations

spouse, you gave a gift of a future interest

below the generation assignment of the

to your spouse as described below, or

donor. See Determining the Generation

Direct Skip

your spouse was not a citizen of the

of a Donee below.

United States at the time of the gift.

The GST tax you must report on Form

A donee that is a trust is a skip person

709 is that imposed only on inter vivos

Terminable interest. Terminable

if all the interests in the property

direct skips. An “inter vivos direct skip” is

interests are defined in the instructions to

transferred to the trust (as defined above)

a gift that (a) is subject to the gift tax, (b)

line 8. If all the terminable interests you

are held by skip persons.

is an interest in property, and (c) is made

gave to your spouse qualify as life estates

A trust will also be a skip person if there

to a skip person. All three requirements

with power of appointment (defined on

are no interests in the property transferred

must be met before the gift is subject to

page 9) you do not need to enter any of

to the trust held by any person, and future

the GST tax.

them on Schedule A.

distributions or terminations from the trust

A gift is “subject to the gift tax” if you

However, if you gave your spouse any

can be made only to skip persons.

are required to list it on Schedule A of

terminable interest that does not qualify

Form 709 (as described above). However,

as a life estate with power of appointment,

NonSkip Person

if you make a nontaxable gift (which is a

you must report on Schedule A all gifts

A nonskip person is any donee who is not

direct skip) to a trust for the benefit of an

of terminable interests you made to your

a skip person.

individual, this transfer is also subject to

spouse during the year.

the GST tax unless:

You should not report any gifts you

Determining the Generation of a

1. During the lifetime of the

made to your spouse who is a U.S. citizen

Donee

beneficiary, no corpus or income may be

that are not terminable interests (except

Generally, a generation is determined

distributed to anyone other than the

as described under Future interest

along family lines as follows:

beneficiary; and

below); however, you must report all

1. If the donee is a lineal descendant

terminable interests, whether or not they

2. If the beneficiary dies before the

of a grandparent of the donor (e.g., the

can be deducted.

termination of the trust, the assets of the

donor's cousin, niece, nephew, etc.), the

trust will be included in the gross estate

Charitable remainder trusts. If you

number of generations between the donor

of the beneficiary.

make a gift to a charitable remainder trust

and the descendant (donee) is

and your spouse is the only noncharitable

Note: If the property transferred in the

determined by subtracting the number of

beneficiary (other than yourself), the

direct skip would have been includible in

generations between the grandparent and

interest you gave to your spouse is not

the donor's estate if the donor had died

the donor from the number of generations

considered a terminable interest and,

immediately after the transfer, see

between the grandparent and the

therefore, should not be shown on

Transfers Subject to an “Estate Tax

descendant (donee).

Schedule A. For definitions and rules

Inclusion Period” on page 2.

2. If the donee is a lineal descendant

concerning these trusts, see section

To determine if a gift “is of an interest

of a grandparent of a spouse (or former

2056(b)(8)(B) and Regulations section

in property” and “is made to a skip

spouse) of the donor, the number of

20.2055-2.

person,” you must first determine if the

generations between the donor and the

Future interest. Generally, you should

donee is a “natural person” or a “trust” as

descendant (donee) is determined by

not report gifts of future interests to your

defined below.

subtracting the number of generations

spouse unless the future interest is also

between the grandparent and the spouse

Trust

a terminable interest that is required to be

(or former spouse) from the number of

reported as described above. However,

For purposes of the GST tax, trust

generations between the grandparent and

if you gave a gift of a future interest to

includes not only an explicit trust, but also

the descendant (donee).

your spouse and you are required to

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2000 Page 6

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