Portability is a useful estate planning tool for married couples with estates large enough to be subject to the federal estate tax.
Portability is a tax election available to married couples that permits a surviving spouse to take advantage of his or her deceased spouse’s unused exemption from federal estate and gift taxes.
Every person has a lifetime exemption from federal estate and gift taxes. Your lifetime exemption for estate tax purposes is $5.45 million. Before portability, you had to “use or lose” that exemption. If you did not make taxable transfers in the amount of your lifetime exemption from federal estate and gift taxes, the unused exemption simply evaporated at your death.
Today you have the option of making the portability election. The unused exemption can be transferred to a surviving spouse, who can then use it to shelter his or her own gifts or estate from transfer taxes.
If you have questions about the portability election, and whether it can benefit your family, please contact my office.
Reference: Portability: A Useful Estate Planning Tool, JD Supra, July 28, 2016.