How to Make a Gift From a Revocable Trust

A revocable trust involves three parties: a settler, the person who sets up the trust; a trustee, the person who manages the trust after the settler's death; and the beneficiary, a person who benefits from the trust. A revocable trust can be revoked once created, which includes adding or removing assets, for example, during the settler's lifetime. There may be a tax obligation for gifts made from a revocable trust.

Instructions

1. Hire an appraiser to determine the value of the gift. This step is only necessary if an appraisal of the gift has not already taken place. High-value assets such as real estate property and automobiles must be appraised upon transfer to a living trust. Obtain a copy of the appraisal report from the trust portfolio.

2. Relinquish the gift to the beneficiary. Have the trustee fill out an Assignment, an instrument used to sign over ownership of a gift to a third party. Sign and date the assignment form and have it notarized by a notary public.

3. Pay a gift tax on gifts that exceed the minimum threshold set by the federal government. As of 2010, the gift exclusion is $13,000.

4. Have the trustee of the trust file a gift-tax return, IRS Form 709. If the value of the gift exceeds the annual gift exclusion threshold, the trust must pay a tax on the gift. If the value of the gift does not exceed the federal gift exclusion, the trust does not have to file Form 709.

Tips & Warnings

• Keep tax returns in a trust portfolio for safekeeping.

References

• "Living Trust Network"; "Gifts from Revocable Living Trusts Qualify for Annual Gift-Tax Exclusion"; Michael P. Pancheri; Nov 14, 2009
• California Estate Planning Attorney: How to Use the Yearly Gift Tax Exemption (IRC s. 2503(b))
• Estate Planning Links: What is a Living Trust?
• The Missouri Bar: What Is a Revocable Living Trust?

Resources

• IRS.gov: Form 709
• IRS.gov: Instructions for Form 709
• LectLaw: Assignment of Property