What is estate tax exemption portability?
The portability feature means that when one spouse dies and his or her estate value does not use up to the total available estate tax exemption, the unused portion of the estate tax exemption is then added to the available estate tax exemption for the surviving spouse.
What does portability mean in estate planning?
Portability is a provision in federal estate tax law that allows a surviving spouse to use any unused estate and gift tax exemption after the deceased spouse’s death. Portability can be used to protect the surviving spouse from having to pay steep gift or estate taxes upon a spouse’s death.
What does electing portability mean?
The “portability election” refers to the right of a surviving spouse to claim the unused portion of the federal estate tax exemption of their deceased spouse and add it to the balance of their own exemption.
When did estate tax exemption become portable?
Portability became available in 2011, when the exempt amount was $5 million; that number was indexed for inflation and went up each year. With the passage of the Tax Cuts and Jobs Act of 2017, it’s $11.7 million per person for deaths in 2021.
How does estate tax exemption portability work?
Portability allows a surviving spouse the ability to transfer the deceased spouse’s unused exemption amount (DSUEA) for estate and gifts taxes to a surviving spouse, so long as the Portability election is made on a timely filed federal estate tax return (IRS Form 706).
What is portability in Florida?
Homestead assessment difference transfer (“portability”) allows eligible Florida homestead owners to transfer their Save Our Homes (SOH) assessment limitation from their old homestead to a new homestead, lowering the assessed value for the new homestead.
How do I use portability of estate tax exemption?
Importantly, portability is not automatic. In order for the surviving spouse to pick up and use the unused exemption of the deceased spouse, the deceased spouse’s estate has to file a federal estate tax return that makes an election to allow the surviving spouse to use that exemption.
What does portability mean in taxes?
Portability is the term used to describe a relatively new provision in federal estate tax law that allows a widow or widower to use any unused federal estate tax exemption of his or her deceased spouse to shelter assets from gift tax during the surviving spouse’s life and/or estate tax at the surviving spouse’s death.
How does portability of exemption work?
Is portability still available?
When enacted, it was meant to apply only to estates of decedents dying before January 1, 2013. However, now portability is permanent — and it can have more of an impact than couples may think on their financial situation upon a spouse’s death.
How is portability elected?
In order to elect portability of the decedent’s unused exclusion amount (deceased spousal unused exclusion (DSUE) amount) for the benefit of the surviving spouse, the estate’s representative must file an estate tax return (Form 706) and the return must be filed timely.