I have multiple minor children and one spouse. I want to target one recipient R with the max under-the-exemption gift money.

I am aware I can give R $14k and my spouse can give R $14k for a total of $28k per year.

But can I direct gifts from my minor children for additional legal tax-free $14k allotments?

  • Don't do this. If you gift $14K to your minor child, it needs to go into a UGMA or UTMA account. If the minor child already has $14K in an UGMA/UTMA account of which you are the custodian, don't take this money out and gift it to R. That could be construed as a breach of fiduciary duty. – Dilip Sarwate Sep 15 '14 at 1:07

You cannot.

Even if your children actually have that money - your fiduciary duty is to them, not to yourself. You cannot gift away money they own for your own purposes. They have to want to gift it away, since it belongs to them. I doubt they do, or they should.

Since you have to have their best interests in mind - you shouldn't allow them gift away such amounts even if they're willing to. Doing otherwise will be a criminal act on your behalf (embezzlement/breach of fiduciary duty).

Do talk to an attorney of course, since I'm not. But that is my understanding of things.

If your kids don't actually have the money, then they can obviously not gift it, so claiming that they did would be a tax fraud.

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  • +1 I would add that even the OP has persuaded the child to give such a large gift (let's assume that the child understands what $14K is) to R, it is the fiduciary's duty to say that giving this money away is not in the best interest of the child. – Dilip Sarwate Sep 15 '14 at 1:11
  • @Dilip I wrote it in my answer. Almost in the same exact words. – littleadv Sep 15 '14 at 1:13

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