Portability and the Fiscal Cliff in Williamsburg, Virginia


On estate taxes, what is Congress going to do about "portability"? Isn't it supposed to expire at the end of this year?

You may be surprised to hear that, on occasion, Congress will agree on something.  Confused by the notion? The media likes to paint a different picture, and in many cases they are spot-on that Congress is up-in-arms about the law. Nonetheless, some interesting things come out of those silent agreements. For example, estate planners may be able to keep stock in “portability,” an estate tax provision that is likely to either survive year’s end or be resurrected in 2013.

We’re still waiting for an official word, but by all accounts “Estate-Tax 'Portability' [is] Likely to Stay” (The Wall Street Journal).  As regular readers know, the concept of portability came out of budget deals two years ago and is one more provision set to expire as part of the so-called “fiscal cliff.”

Portability allows married partners, who already enjoy special rights to exchange wealth between themselves tax-free at the passing of the first, to pass on their unified estate/gift tax exemptions too.  Without portability, a surviving spouse may be required to pay estate taxes on the couple’s combined estate value, if the first spouse to die did not properly apply their exemption.  A marital trust was the usual strategy employed to break this vicious predicament. Under current law, though, the exemption is now portable (so long as the estate tax return is filed on the passing of the first to die); so the surviving spouse can apply both exemptions to the final estate.

It’s a powerful strategy. Under current law, this means that a surviving spouse can pass a whopping $10.2 million in estate value to their heirs, estate-tax-free.

The end of the year could bring about the expiration of both the generous estate tax exemption and portability itself. Though experts predict that portability is here to stay, no one really knows what Congress will decide.

Reference: The Wall Street Journal (November 4, 2012) “Estate-Tax 'Portability' Likely to Stay

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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.