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Estate Planning: Portability May Now Be More Important Than Ever!

The 2021 Federal Estate Exemption is $11.7 million dollars for individuals and $23.4 million dollars for married couples. The exemption amount is a result of the Tax Cuts and Jobs Act, which increased the exemption from $5.49 million dollars in 2017 to $11.4 million dollars in 2018, both numbers indexed for inflation. The Estate Exemption provides a credit to taxpayers that allows individuals to exclude the amount of unused exemption from their taxable estates upon death, therefore shielding that amount from the federal estate tax, a tax that hovers at a 40% rate. Pursuant to current law, the increased exemption will sunset back to its 2017 exclusion amount in 2026.

In 2013, legislation was enacted that made a concept known as “portability” permanent. Portability refers to the ability of a married couple to “port,” or transfer, the unused exemption of the deceased spouse to the surviving spouse, essentially preserving the amount that belonged to the decedent to be applied to the survivor’s estate. This would increase the exemption amount available to the survivor’s estate at death by the amount that remained unused by the decedent, in many cases preventing the implication of estate tax on the second death and preserving assets for the heirs of the couple.

The estate tax exemption has been a recent topic of fervent discussion, as there has been speculation that new legislation may reduce the exemption amount in advance of the 2026 sunset date. As a result,  now may be more important than ever to ensure that a surviving spouse elects for portability of the unused exemption belonging to the deceased spouse. This can be done with proper trust and estate administration with the assistance of a qualified estate administration attorney.

Chauvel & Glatt, LLP, offers specific expertise in trust and estate administration and can assist you with ensuring that your family is in the best position to preserve assets for future heirs. There are steps that need to be taken to elect for portability and Internal Revenue Service deadlines imposed upon doing so. Contact our attorneys to evaluate the particulars of your situation and ensure that you take advantage of this important legal right.

The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (Photo Credit: Depositphoto.com )


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