Meg owns and operates a plastics manufacturing company, and Maynard is a teacher. Maynard and Megs principal asset is stock in the family business (Meg owns 80 percent of the stock, and Maynard owns the other 20 percent); the business was recently appraised at $15.2 million. They have about $1 million of other assets, all jointly held. Meg has four children from a previous marriage: Tom (age 26, a lawyer), Martha (age 24, a manager in the family business), and twins Hal and Al, both college students age 20. Both Martha and Hal have indicated an interest in continuing the family business.

Neither Maynard nor Meg has made any lifetime transfers. They desire for their children to inherit all of their properties eventually. Since Meg is 10 years older than Maynard, she would like to ensure that Maynard has enough income to live on should he survive her, and she also would like to ensure that her children receive the entire estate after he dies. They would also eventually like to leave a gift of approximately $500,000 to State University to fund a scholarship program.

Prepare hypothetical gift tax returns for the first year of implementing the suggested estate plan of Maynard and Meg. The returns should reflect gift-splitting and any intra-spousal transfers as well.