Is the transfer of property into a trust subject to gift tax?

Sadly, yes. Gifts beyond a certain size transferred into a trust are subject to gift taxes. Current law permits each person to make an unlimited number of tax-free gifts per year, as long as gifts are not more than $11,000 each ($22,000 if a couple makes the gift). Gifts can be made to trusts and to charities, as well as to individuals. The gift tax rates, beginning at 18%, are the same as those of the estate tax. A gift tax return generally must be filed if the amount transferred into a trust exceeds $11,000. Married couples who consent to "split" gifts of over $11,000 but up to $22,000 must report the gifts to the IRS, although no gift tax is due under the annual exclusion. However, for gifts to a trust to qualify for the annual exclusion, they must be considered gifts of a present interest. Gifts of a future interest do not qualify for the annual exclusion. Although the facts and circumstances establishing a present interest can be complicated, this means whether an individual receiving the gift can currently utilize the gifts and its benefits or it is deferred until some future date and time. If there is deferral of the use of the gift, it does not qualify for the annual exclusion.