TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, January 17, 2013

Estate Tax Spousal Portability

Nathan L. Wadlinger (LL.M. (Taxation) 2013, NYU), The Portability Pill: Examining the Trial Stages of Federal Estate and Gift Tax Spousal Portability, 47 Real Prop. Tr. & Est. L.J. 367 (2012):

Congress enacted portability as part of the Tax Relief Act of 2010, for the first time allowing the transfer of a decedent spouse’s estate tax exclusion amount to their surviving spouse. However, portability is set to expire at the end of 2012. In anticipation of legislation from Congress, this Article explains how the portability provisions work, and analyzes the successes and failures in reaching the policy goals behind portability. For example, while Congress aimed to provide a simple alternative to estate planning through portability, basic estate planning continues to accomplish superior results in many cases. Further, portability may complicate estate administration because estates that fall under the estate tax exclusion amount must file Form 706 merely to preserve the decedent spouse’s exclusion amount. The Article acknowledges portability as an important step toward achieving policy goals of recognizing married couples as a single economic unit and minimizing the need for estate planning. However, portability fails to fully achieve these policy goals and further legislation is needed to enhance simplicity and certainty of the outcome for those who elect to use portability.

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