By : | Category : Estate Planning, Estate Taxes, Family Trusts, Living Trusts, Orange County | Comments Off on RISKS OF PORTABILITY UNDER THE NEW ESTATE TAX LAW

29th Jan 2011

Under the new Estate Tax law, surviving spouses have a “portability” right when their spouse passes away.  The survivor can elect this “portability” in the 706 Estate Tax Return.  The advantage of the portability is the use of the unused portion of the deceased spouse’s exemption if they pass away in 2011 and 2012.   

This could be helpful especially if the exemption amount is severely reduced in 2013; an event that is very possible.

There are risks, however, one of which is remarriage.   For example, if Dick and Jane are married, and Jane passes away, but only $1M of her $5M exemption is used; then there is an unused portable credit of $4M.

 Dick remarries Alice, who also predeceases him.  If Alice leaves a $1M unused portable credit, then Dick only has the $1 million of unused portable credit of his second wife, not the $4 million from his first wife.  

 It is questionable as to how frequently this series of events would occur.  

The use of portability requires the filing of a 706 Estate Tax return, something that many surviving spouses would not have had to bother with in prior years.   But, the option will have to be considered for decedent’s estates over the next couple of years.

Estate Planning Attorney


This blog is intended for informational purposes only and is not a substitute for legal advice from a qualified attorney in your jurisdiction. 

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