Long Island Elder Law & Estate Planning

Can a Surviving Spouse Use Two Estate Tax Exclusions?The estate tax exclusion is the amount that can be transferred before the death tax would be applicable. We should point out the fact that the estate tax is not a factor for transfers between spouses, because there is an unlimited marital deduction.

However, to use the marital deduction, your spouse must be an American citizen. If you are married to a citizen of another country, you cannot utilize the marital deduction.

This blog post is being written late in 2015. For the rest of this year, the exact amount of the federal estate tax exclusion is $5.43 million. There are ongoing annual adjustments to account for inflation, and the adjustment for 2016 has recently been announced by the Internal Revenue Service. Next year, the estate tax exclusion will go up by $20,000 to $5.45 million.

Estate Tax Exclusion Portability

The estate tax exclusion is afforded to each individual taxpayer. As a result, if you are married, you have your own exclusion, and your spouse has his or her own exclusion as well. Using the figure that is in place for 2015, as a couple, you have a total exclusion of $10.86 million.

This raises an interesting question: what happens if your spouse passes away before you do? Do you still have two exclusions to utilize?

Up until the beginning of the 2011 calendar year, the answer to this question was no. The estate tax exclusion was not portable between spouses.

At the end of 2010, a legislative measure was passed that impacted the estate tax parameters in a number of different ways. One of the positives that came out of the passage of this act was the portability of the federal estate tax exclusion.

A provision contained within the act made the estate tax exclusion portable between spouses, so a surviving spouse could use the exclusion that was afforded to his or her deceased spouse.

That legislative measure was only in effect for two years, but a new piece of legislation that is now called the American Taxpayer Relief Act of 2012 was passed at the very end of that year. Under the terms of this measure, the portability of the estate tax exclusion was made permanent.

However, portability is not automatically granted by the Internal Revenue Service. A representative of the estate must file Internal Revenue Service Form 706 to opt for portability. This form must be filed with a nine months of the passing of the decedent, but a six-month extension can be granted by the IRS.

Schedule a Consultation

If the estate tax is a factor for you, there are steps that you can take to mitigate the burden. Contact us through the following link if you would like to set up a consultation: Smithtown Long Island Estate Planning Attorneys.

 

 

 

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About Mark S. Eghrari, Estate Planning Attorney

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.