There may be more grace for "portability" elections.
Losing a spouse changes everything.
In the midst of the losing your best friend, you often have other administrative duties to settle his or her affairs.
Especially if you are above the estate tax threshold.
According to a recent Forbes article titled “IRS Offers Estate Tax Relief To Widows And Widowers,” one of the most important actions to take involves the "deceased spousal unused exclusion amount (DSUE)".
What is the DSUE, otherwise known as the "portability" election?
Set in 2010, it provided for use of both the unified credit and the unlimited marital deduction.
What are these?
The unified credit protects a certain amount from estate taxes.
In 2017, this amount is $5.49 million for an individual.
The unlimited marital deduction allows for money left to the surviving spouse to be free from the estate tax.
The DSUE was particularly helpful in diminishing the need for certain couples to create trusts to protect their money from the estate tax.
A provision to know is Revenue Procedure 2017-34.
What does this do?
If the decedent died after December 31, 2010 and no estate tax return was filed or required, the executor can file a return with the portability election and take advantage of the estate tax relief.
In this filing the executor must reference the revenue procedure at the top of the first page.
This procedure is available until January 2, 2018.
After this date, the time limit is up to two years after the death of the first spouse to pass on.
Filing forms may seem like a headache, but a small headache may be worth it if you could potentially die with a net worth exceeding the exclusion amount.
Estate planning should not be taken lightly.
Work with an experienced estate planning attorney to determine if this is appropriate for your situation.
Reference: Forbes (June 12, 2017) “IRS Offers Estate Tax Relief To Widows And Widowers”