Portability Does Not Preclude The Need For Marital Transfers And Trusts

Exemption portability, made permanent by the American Taxpayer Relief Act of Portability2012, provides significant estate planning flexibility to married couples if sufficient planning has not been done before the first spouse’s death. How does it work? If one spouse dies and part (or all) of his or her estate tax exemption is unused at death, the estate can elect to permit the surviving spouse to use the deceased spouse’s remaining estate tax exemption.

But making lifetime asset transfers and setting up trusts can provide benefits that exemption portability does not offer. For example, portability does not protect future growth on assets from estate tax like applying the exemption to a credit shelter trust does. Also, the portability provision does not apply to the GST tax exemption, and some states don’t recognize exemption portability.

Have questions about the best estate planning strategies for your situation? Contact us — we’d be pleased to help.

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