Gift Tax Consequences

There are different gift tax consequences when a person creates a joint tenancy with his spouse versus anyone else. When you create a joint tenancy with your spouse, there are no gift taxes. You can give your spouse an unlimited amount of property without gift taxes. The IRS calls this benefit the unlimited marital deduction.

When you create a joint tenancy with someone other than your spouse, you are making a gift that is subject to gift taxes. If you take a piece of property that is worth $100,000 and put the property in joint name with your son or partner, or anyone else, you have made a $50,000 gift to that person. While this book won't get into the particulars of gift taxes until Chapter 17, for now it is important to understand that when you create most joint tenancies with someone who is not your spouse, you are making an irrevocable gift that is subject to gift taxes.

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