Attorney
Married couples can transfer up to $38,000 per recipient in 2026 without using any of their lifetime federal gift and estate tax exemption, making annual gifting a valuable way to support children, grandchildren, and other loved ones while gradually reducing the size of an estate over time. For California couples, whether that result comes from community property rules or a formal gift-splitting election depends on how the gift is made.
Understanding the difference can help you structure gifts properly, satisfy any IRS filing requirements, and make annual gifting part of a broader estate planning strategy.
What Is Gift Splitting?
Gift splitting is an IRS election that allows married couples to treat a gift made from one spouse’s separate property as though each spouse made one-half of the gift.
For 2026, the federal annual gift tax exclusion is $19,000 per recipient. By electing gift splitting, one spouse can give up to $38,000 to a recipient, with the IRS treating the gift as though each spouse contributed $19,000.
For example, if one spouse gives an adult child $38,000 from a separately owned investment account, the couple may elect gift splitting so the gift qualifies for both spouses’ annual exclusions.
How Does Community Property Affect Gift Splitting in California?
California is a community property state, and that can affect how gifts are treated for federal gift tax purposes. Gifts made from community property are generally treated as though each spouse made one-half of the gift automatically, so a formal gift-splitting election often is not required.
By contrast, the gift-splitting election generally applies when one spouse makes a gift using separate property, and the couple wants the IRS to treat it as having been made equally by both spouses. Depending on the gift, Form 709 may still be required, so it is worth reviewing significant gifts with an estate planning attorney.
Who Can Elect Gift Splitting?
If a gift-splitting election is needed, both spouses must generally be married when the gift is made, agree to the election, and qualify under the federal gift tax rules. The election applies only to gifts made during that calendar year.
How Much Can Married Couples Give?
A married couple may give up to $38,000 to one recipient during 2026 without using any portion of either spouse’s lifetime gift and estate tax exemption, assuming the gift qualifies for the annual exclusion.
For example, a couple with three adult children could transfer up to $114,000 in one year by giving each child $38,000. Because the exclusion applies per recipient, the same strategy may also be used for grandchildren or other beneficiaries.
Do You Have to File IRS Form 709?
Many people are surprised to learn that a gift tax return may be required even when no gift tax is owed.
If you elect gift splitting for a gift made from separate property, each spouse generally must file a separate IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, even if no tax is due.
Gifts made from community property are treated differently because each spouse is generally considered to have made one-half of the gift automatically. Depending on the circumstances, Form 709 may still be required to report each spouse’s share. Filing the appropriate return helps document the transaction and reduce the likelihood of questions later from the IRS.
When Is Gift Splitting Most Useful?
Gift splitting often makes sense for couples making substantial gifts from separate property or incorporating annual gifting into a broader estate plan. Depending on your circumstances, it may work alongside trusts, business succession planning, charitable giving, or other wealth transfer strategies.
Reviewing your gifting strategy as part of your overall estate plan helps ensure each piece works together and supports your long-term goals.
Build an Annual Gifting Strategy That Fits Your Estate Plan
Annual gifting can be an effective way to reduce the size of your estate over time while helping family members during your lifetime. For California couples, understanding the difference between community property gifts and a formal gift-splitting election can help you make informed decisions and avoid unnecessary reporting issues.
At Scott D. Fisher, A Professional Law Corporation, we help California individuals and families develop estate plans that make thoughtful use of available tax rules while supporting their long-term goals. If you’re considering significant gifts to children, grandchildren, or other loved ones, contact us. We can help you determine the most appropriate approach and ensure your gifting strategy fits within your overall estate plan.