TaxProf Blog

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

Thursday, January 10, 2013

Estate Tax Portability FAQs

Forbes:  A Married Couple's Guide To Estate Planning, by Deborah L. Jacobs:

The New Year’s Day fiscal cliff bill, which ended an 11-year period of uncertainty about estate tax exemptions and rates, also made permanent a  wonderful break for widows and widowers that was set to expire after a two-year introductory period. Starting for deaths in 2011, and now going forward, widows and widowers can add any unused exclusion of the spouse who died most recently to their own $5.12 million tax-free amount. This enables them together to transfer up to $10.24 million tax-free. It also eliminates the need in many cases for the tax-planning gyrations that lawyers routinely recommended to preserve each spouse’s estate tax exemption amount. ...

As with any new process there is a shakeout period, though. Here are answers to some frequently asked questions:

  • Does this provision help me if my spouse died years ago?
  • Does portability apply to lifetime gifts as well as assets that pass through an estate plan?
  • Does portability apply to same-sex married couples?
  • Does portability apply if the surviving spouse is not a U.S. citizen?
  • Is portability automatic?
  • Is the amount that’s portable adjusted for inflation?
  • What happens if you remarry?
  • Can I use my exclusion instead to provide for children from a previous marriage?
  • Does portability also apply to the exemption from generation-skipping transfer tax?
  • Do I still need a bypass trust?
  • Is this a subject that should be covered in prenuptial agreements?

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