Here for YOU Today and There for your FAMILY Tomorrow

Often Overlooked, at a High Cost: Portability Election NOT AUTOMATIC



Given the size of the federal estate tax exemption, it’s not unusual for most people in the middle income tax brackets to forget to make a portability election, which protects the option for the future. The IRS has wisely created a number of ways that can correct this oversight, but there are limitations. This usually occurs following the death of a spouse.

ThinkAdvisor explains the details in its article, “For Estate Planning, Don’t Overlook Late Portability Elections.” The Portability Rules let a surviving spouse make use of both his or her individual federal estate tax exemption and the exemption granted to a first-to-die spouse.

This estate tax exemption can, however, frequently result in an issue for surviving spouses, when the entire estate of the first-to-die spouse is sheltered from estate tax. A commonly overlooked key requirement for obtaining the benefits of portability, is that you must ask for it. Even when there’s no estate tax due upon the death of a first-to-die spouse, the executor (personal representative in Florida) of the estate must elect portability by filing an estate tax return on Form 706 within nine months of death because it is not automatic..

If you don’t make the election, it can eventually cause the estate of the second-to-die spouse to bear the entire tax burden—especially because the surviving spouse usually inherits most of a deceased spouse’s estate. That will increase the value of his or her own estate.

Failure to elect portability is common, and it could be valuable, such as a lower estate tax exemption in future years or if the estate grows substantially in the years between the death of the first spouse and the surviving spouse.

If the estate was originally required to file an estate tax return, there are no extensions available.

Extensions might be available, according to the IRS, if there was demonstrable good cause for the failure to file the portability extension. Those include a taxpayer’s reliance on a qualified tax professional’s advice that no portability election was needed. Another is that the taxpayer was unaware of the need to make the election after exercising reasonable diligence in every other area of the estate, especially if the issues of the estate were complex and the taxpayer had little or no experience with these types of issues. Even better: discovering the error before the IRA does or relying on written guidance from the IRA are also considered good reasons.

Do you live in Miami-Dade, Broward, or Palm Beach counties in Florida? Laws are constantly changing-- has your estate plan been reviewed in the last 2-3 years? Call me (954-888-1747) right away for peace of mind. I can help!

  • My practice is exclusively estate planning and probate,
  • I have prepared numerous estate plans in 16 years of practice,
  • I have administered estates and trusts through Probate all over Florida,
  • I am a Certified Financial Planner Professional™, and
  • I am here for YOU today and there for your FAMILY tomorrow.

Reference: ThinkAdvisor (April 11, 2017) “For Estate Planning, Don’t Overlook Late Portability Elections”

Why would we recommend D.T.F.? Several Reasons: Your ability to explain complex estate problems, clearly and patiently; your total lack of arrogance and pretense; a strong feeling that you are motivated by what you perceive is best for your client, rather than what would generate the largest legal fees; finally, and importantly, you are a lovely guy. A.C.

Two words cannot sum up the entire process of creating my “trust.” I enjoyed your attention to detail, your patience of explaining terms and conditions until I understood, also giving me copies to read and understand. Thank you for your suggestions on what was best for “me” but still allowing me to make my choice. Most of all, thank you for thinking of “me.” Wells Fargo said “you were the best” I cannot deny that. Again thank you very much for everything. Anna is an asset or a compliment to the firm. She is warm and very caring. It was great doing business. Thank you.