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Preserve Portability with Estate Tax Filing

An estate-tax return must be filed soon after the first partner's death—usually within nine months—in order for a couple to get this new benefit.

Don’t lose the value of your partner’s estate tax exemption by failing to file an estate tax return! Recently, the IRS issued new guidance on this important estate tax issue for married couples regarding the portability of individual estate tax exemption between spouses.

Each individual is allowed to exempt a certain amount of asset value from estate taxation at death, currently $5.12 million. Portability is a new concept, introduced in 2012, to make it easier for a surviving spouse to utilize both their own exemption and that of their deceased spouse.

Like most IRS regulations, however, there are important dance steps to follow in order to achieve the desired result. An estate tax return must be filed soon after the first spouse’s death, usually within nine months. If you miss this filing, you likely will lose the value of the first spouse’s exemption. This means the surviving spouse could only shelter about $5 million of estate assets from taxation, instead of the approximate $10 million value of the couple’s combined exemptions.

You can read more about portability and the various estate tax consequences in a recent Wall Street Journal article, “Avoiding Estate-Tax Traps.”

Even if your estate assets are far below the exemption amount, preserving both spouses’ estate tax exemptions is an important aspect of one’s comprehensive estate plan. Remember, we never know what twists and turns our lives may take, and a small estate today could grow through any number of possible circumstances over time.

You can learn more about estate planning and elder law issues on our website. Be sure to sign up for our complimentary e-newsletter to stay abreast of issues like these that could affect you, your loved ones and your estate planning.

Reference: The Wall Street Journal (August 7, 2012) “Avoiding Estate-Tax Traps

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Coronavirus/Covid-19
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.