You CAN take it with you. Just when is the DSUE [Deceased Spouse Unused Exemption] available to a surviving spouse or the estate of a surviving spouse for use in determining the surviving spouse’s applicable exclusion amount?
By Stephen K Lehnardt
“You Can’t Take It With You” applies to many things, but not anymore to the estate tax exemption. The estate tax exemption has finally become portable, however, just like the first portable computers, the bugs and difficulties for estate tax “portability” still will need some working out.
It can be very challenging to stay on top of federal estate tax law changes. For instance, experts and taxpayers alike are grappling with the ins and outs of “portability.” How and when can it be used?
The temporary regulations governing portability are now on the books. While there is some guidance regarding how a “Deceased Spouse Unused Exemption” (DSUE) actually works, a recent Forbes article, titled “Estate Tax Portability - Date DSUE Amount May Be Taken Into Account,” provides some practical advice.
As many know, “portability” refers to the new ability of a deceased spouse to pass along their unused unified exemption amount (the amount in a lifetime that you can either transfer without gift tax or can pass through your estate without estate tax) to their surviving spouse without implementing traditional estate tax planning techniques.
The question many surviving spouses might face is when to make use of the exemption. What if they have a gifting strategy, especially if there is little time to spare? Does the DSUE pass immediately or does the estate tax return have to be filed?
As a rule of thumb, the DSUE passes immediately. In turn, this can buy some time given how long it could take to file an estate tax return. As with all tax matters, be sure to consult with your professional advisors before making a move you cannot undo later.
For more information in Liberty, MO and the Kansas City Area about DSUE and effective estate tax planning, and to access free information and tools to organize your estate, visit our estate planning website.
Reference: Forbes (January 14, 2014) “Estate Tax Portability - Date DSUE Amount May Be Taken Into Account”