Tuesday, January 31, 2012
Currently, individuals receive a $5.12 million gift exemption ($10.24 million for couples). Portability allows a surviving spouse to utilize any of the deceased spouse's unused exemption, giving the surviving spouse the potential of gifting up to $10.24 under his or her exemption. The surviving spouse must file form 706 within nine months after the deceased spouse's death to claim portability, but a six month extension is allowed if the surviving spouse makes a request within nine months of the deceased spouse’s death.
Form 706, which is around twenty-pages long, is quite complicated, and taxpayers typically will benefit from seeking profession help in filling it out. However, because of the length and complex nature of the form, attorney fees can range from $3,000 to $10,000. Taxpayers may save money by downloading and filling out the form themselves, hiring a licensed CPA to fill out the form, or diversifying their investments within a few companies.
See Deborah L. Jacobs, Tax Break May be Boon to Lawyers, Forbes, Jan. 18, 2012; EJ Antezana, Right of Portability for Married Couples Who Suffer the Loss of a Spouse, Wealth Strategies Journal 2.0 (Beta), Jan. 28, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.