“Portability” is a concept that the IRS allows wherein by filing an Estate Tax Return or IRS Form 706, one may preserve the unused Federal Estate Tax Credit of the first spouse who passes on. The Estate Tax is due when the second Spouse passes on. Each spouse has a Unified Credit amount allowed by IRS which is exercised by Estate Tax Planning in your Estate Tax Design prior to death and with proper After Death Administration or after death through “Portability”. One can use both spouses Credit shelters or Estate Tax Exemptions to limit Estate Tax Exposure by good Estate Planning work done prior to death and good After Death Administration or by exercising “Portability” after the first death.
There was some question as to whether or not “Portability” would remain in effect. There is a limited amount of time in which to file the Estate Tax Return or IRS Form 706, so one needs to move quickly on that when the first spouse passes. Even if it does not appear to be a Taxable Estate it’s often a good idea to file the Estate Tax Return on the first death, in case the Estate Tax Exemption is lowered before the second spouse dies or the assets increase in value.
Although the Federal Estate Tax Exemption aka Unified Credit, is very high at over 5 million dollars, it is still an issue that a good Estate Planning Attorney pays attention to.
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.