I know the general rule that if taxpayer writes checks to noncharitable donee, and dies prior to the checks being cashed, there is not a completed gift at date of death and the amounts are included in the estate tax return.Here is my facts and questions: Taxpayer and spouse write gift checks ($22K to each kid) using community property on Jan 1. Taxpayer dies on Jan 5. Checks cashed after Jan 5. Trust document leaves has a bypass trust and a general power of appointment (not QTIP) marital trust. So how do I treat the "gifts that were not gifts"? I suppose I could allocate them to the marital trust and then surviving spouse is treated as making the gift. Not good because now it is over the $11,000 exclusion for her.
That works in my situation, but what if there was no marital trust - it all goes to bypass trust? Typically, the trust does not provide distributions to kids until surviving spouse dies. I suppose I could treat as a loan to surviving spouse and have him/her repay.
Sorry for the rambling nature of this post. If anyone has dealt with this or has an answer please let me know.
