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Minimizing taxes when passing on estate to the spouse

The American Tax Relief Act of 2012 allows for the portability of an applicable exclusion amount between two spouses. In other words, the portability election allows for transference of an unused estate tax exclusion of a spouse that has died to go to the surviving spouse.

The surviving spouse can then take this portion for their share concerning estate or gift tax purposes. This is important because it can be used by the surviving spouse to reduce their gift or estate tax liability. What is called the “deceased spouse’s unused exemption” or DSUE is now being viewed as a valuable asset among individuals contemplating marriage.

When the portability election is made, a specific amount of the DSUE could then be transferred by the surviving spouse to a child of the surviving spouse without worries of paying a federal transfer tax.

If not transferred, the DSUE amount could present a savings for one’s federal estate tax. Depending on the amount of the estate, in certain circumstances this could be substantial. Portability could thus be a good option when a marital agreement is being prepared. How this should be treated, however, would best be discussed with an attorney regarding surrounding issues.

Minimizing future estate tax liability is just one of many items to be discussed when speaking to an attorney about estate planning. Still, depending upon one’s individual circumstances, this could be a vital issue to discuss. We as Florida residents only have one opportunity to pass our estate on and nobody will wish to make mistakes when it comes to such items.

Source: Forbes, “Estate Tax Portability And Marital Agreements – A New Consideration,” Lewis Saret, Feb. 25, 2014



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