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News & Info

Understanding IRS Rules on the Portability Election

Jun 16 2015

Written by Jason C. Henbest, Esq. and Brittany Saxton

The death of a spouse is both traumatic and painful. Not only has your life partner passed away, but now you are left to manage the fiscal and legal business of an estate without your close friend. For surviving spouses with the responsibility of a decedent’s estate, you should consider the benefits of the portability election.

The portability election is relatively new, made permanent by the American Taxpayers Relief Act of 2012. The 2012 Act states that any unified credit for estate tax purposes unused by the decedent’s estate is “portable.” Ultimately, the surviving spouse has potential to use this unused, unified credit for gift or estate tax purposes.

Surviving spouses can make gratuitous transfers during life or at death with the availability of the deceased spousal unused exclusion amount (DSUE) under the Internal Revenue Code 2010(c)(5)(A). The surviving spouse’s overall exclusion is the total sum of their own exclusion in addition to their deceased spouse’s DSUE amount.

Likewise, the portability election applies as follows: 

1. The deceased spouse must have been a United States citizen or legal resident at time of death.
2. The deceased spouse must have passed away after 2010. 
3. His/her estate tax return must be timely filed by the due date (typically nine months after passing plus any granted extension). 
4. The executor must assess the gross value of the estate based on the value of the estate’s assets. 
5. The executor must have not filed an estate tax return under IRC Section 6018(a).

If you have questions about electing portability or if you are unsure whether it would benefit you, contact your local Barnegat attorney for more information.