117 / What is the advantage of the “split-gift” law where one spouse gives a life insurance, endowment, or annuity contract to a third person?

If the gift qualifies as a present interest gift ( Q 218), each spouse’s annual exclusion ($19,000 in 2025-2026, $18,000 in 2024, $17,000 in 2023 and $16,000 in 2022) can be applied to reduce or eliminate the gift tax. Thus, $38,000 in 2026 (2 × $19,000) can be subtracted from the value of the contract given and from premiums paid by the donor as gifts in subsequent years (so long as the spouse consents each year) in computing taxable gifts for years in which the gifts are made. The consenting spouse’s unified credit also can be applied against any gift tax imposed on the spouse’s gift where the gift is in excess of the allowable exclusion or is a future interest gift. (See also Q 214.)