You may be surprised to hear that, on occasion, Congress will agree on something. Confused by the notion? The media likes to paint a different picture, and in many cases they are spot-on that Congress is up-in-arms about the law. This includes the so-called "portability" of the estate tax exemption between spouses.
So, what do pundits in the know think about the future of portability?
The Wall Street Journal recently offered its take on the matter in an article titled "Estate-Tax 'Portability' [is] Likely to Stay." [Background: as regular readers know, the concept of portability came out of budget deals two years ago and is one more provision set to expire as part of the so-called "fiscal cliff."]
Portability allows married partners, who already enjoy the right to exchange wealth between themselves tax-free at the passing of the first, to pass on their unified estate/gift tax exemptions along, too. Without portability, a surviving spouse may be required to pay estate taxes on the couple's combined estate value, if the first spouse to die did not properly apply their exemption through traditional estate planning techniques.
A marital trust was the usual strategy employed to break this vicious predicament. Under current law, though, the exemption is now portable (as long as the estate tax return is filed on the passing of the first to die); so the surviving spouse can apply both exemptions to the final estate.
It's a powerful strategy. Under current law, this means that a surviving spouse can pass a whopping $10.2 million in estate value to their heirs, estate-tax-free.
The end of the year could bring about the expiration of both the generous estate tax exemption and portability itself. Though experts predict that portability is here to stay, no one really knows what Congress will decide.
And, after all, the future can be a tricky thing to predict anyway.
Stay tuned.
Reference: The Wall Street Journal (November 4, 2012) "Estate-Tax 'Portability' Likely to Stay"
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