As is widely known, gifts of $10,000 or less per year per donee are eligible for the federal gift tax annual exclusion. Moreover, gifts of $10,000 or less do not require the filing of a federal gift tax return. What is less widely known is that only present interests qualify for the annual exclusion. Gifts of future interests are not eligible. And gifts of future interests require the filing of a federal gift tax return regardless of amount.
Many seemingly ordinary transactions can give rise to gifts of future interests. Besides requiring the filing of a federal gift tax return regardless of amount, the major concern is that the gift uses up the federal estate and gift tax unified credit.
Harl, Neil E.
"The Annual Exclusion and Future Interests,"
Agricultural Law Digest: Vol. 4
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol4/iss9/1