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IRS Grants Extension of Time to Make Late Portability Election for Certain Estates
Posted by Kristen Shepley on Wed, Mar 19, 2014 @ 04:28 PM

In estate planning, the concept of "portability" of a deceased spouse's unused exclusion (DSUE) amount is relatively new. For decedents dying after December 31, 2010, if a first-to-die spouse has not fully used the estate tax exclusion, the DSUE amount can be transferred to the surviving spouse. This was originally passed as a two-year temporary provision (effective for 2011 and 2012) until it was made permanent in the American Taxpayer Relief Act of 2012.

Portability provides an alternative approach to fulfill a common estate planning goal of a married couple to take full advantage of both spouses' estate tax exclusions. Prior to portability, this was typically accomplished by funding a "bypass trust" (also known as a credit shelter trust) at the death of the first-to-die spouse with the exclusion amount and leaving the balance of the estate to qualify for the unlimited marital deduction. Now that portability is also an option, estate planners should determine which approach is better for a specific situation. Portability may be beneficial for certain estates and not others, but that is beyond the scope of this article.

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Topics: IRS Updates, estate planning, portability

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