Trusts & Estates

by Matthew T. McClintock, JD | VP of Legal Education, WealthCounsel

If the death tax is dead, what’s the point of estate planning?

Beyond the $5,000,000 inflation-adjusting estate tax exemption, one of the most taxpayer-friendly aspects of the American Taxpayer Relief Act of 2012 (ATRA) is a concept referred to as “portability.” A temporary feature under the previous tax act, estate tax exemption portability became a permanent fixture under ATRA. What is it? How does it work? Why should you care?

It’s essential to remember, however, that portability does not happen automatically. While federal law allows a surviving spouse to claim their deceased spouse’s unused federal exemption and add it to the surviving spouse’s own exemption (referred to as the DSUE amount, or “Deceased Spouse’s Unused Exemption amount”), the surviving spouse must claim the DSUE amount as an election on a timely-filed federal estate tax return. If no return is filed, then the survivor loses their spouse’s unused estate tax exemption.

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