There may be battles aplenty over the budget, and many more to come. At least we have a set of solid laws set in stone under the recently passed American Taxpayer Relief Act of 2012 (ATRA), right?
When it comes to making estate plans certainty is an essential. Any uncertainty can wreak havoc on even the most carefully crafted plans in Overland Park and elsewhere. One popular “permanent” part of estate planning under ATRA is “portability.” Is it here to stay and can we trust it?
“Portability”, as you may well know, is the new ability of a spouse to pass their unused unified gift tax lifetime exemption and/or estate tax exemption onto their surviving spouse. It grew out of budget deals and then was made “permanent” under ATRA (also known as the "bridge over the Fiscal Cliff").
As a questioner in a recent Wall Street Journal Q&A (“Is Estate-Tax Portability Permanent?”) pointed out, estate tax “portability” is a great option... but an act of Congress could just as easily undo it. What then?
The general consensus is that portability is probably here to stay and for a multitude of reasons. Assuming that remains true, the key to portability is to separate myth from reality. The myth: portability is not automatic? The reality: it can be rather complex, especially in terms of unintended consequences. For example, what happens when the surviving spouse remarries?
For the time being, perhaps you can breathe easier as to portability. The larger question, however, is what do you and your spouse hope to achieve through your estate plan from both tax and non-tax perspectives? Never let the tax tail wag the estate planning dog!
Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.
Reference: The Wall Street
Journal (March 31, 2013) “Is Estate-Tax Portability Permanent?”