Monday, November 5, 2012
While I have previously discussed the estate tax in depth, I have yet to discuss many of the other provisions that are related to the estate tax. One of these provisions is the "portability" provision. While there is still uncertainty about whether Congress will maintain the estate tax exemption at $5.12 million or change it, some experts believe that Congress will most likely continue to maintain the portability provision. The primary reason for this is because this particular provision has bipartisan support in Congress.
The provision here essentially "makes the estate-tax exemption 'portable' between a husband and wife." In other words, if one spouse passes away without using their estate-tax exemption, the surviving spouse can still use their late spouse's exemption automatically. Most couples can already transfer assets to each other through the marital deduction, therefore, these people do not need the exemption. This is way to ensure that one spouse's exemption is not lost upon their death and can still be used by to ensure that the property that would not otherwise be taxed remains tax free.
See Tom Herman, Estate-Tax 'Portability' Likely to Stay, Wall Street Journal, Nov. 4, 2012.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.