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Understanding the major estate tax issues for surviving spouses

On Behalf of | Apr 16, 2015 | Estate Taxes

Georgia residents with an interest in tax issues may wish to know about new regulations that are expected to be issued by the IRS. Legal and accounting professionals are notifying clients about this matter, which affects estate taxes and could have serious tax implications.

The main issue has to do with portability, a provision of federal estate tax law that allows a surviving spouse to carry over any unused portion of the deceased spouse’s estate tax exemption. In 2015, this exemption is $5.43 million per person. If one spouse passes away with an estate of less than that amount, portability allows a surviving spouse to add that unused portion to their own estate tax exemption. While relatively few people leave estates that are that large, portability can still come in handy for minimizing the future estate taxes of many surviving spouses when they pass away.

However, they need to specifically elect to take advantage of portability by filing a special estate tax return after their spouse has died. This cannot be filed by the surviving spouses themselves, though. Only the executor of the estate can file the return and elect portability, taking it out of the surviving spouse’s hands. The American Institute of Certified Public Accountants is seeking to have changes made that could make this easier for surviving spouses, including a longer period of time to make the portability election and a simpler form on which to do so. The group is also petitioning the IRS to allow surviving spouses to make this election themselves.

Understanding the issues surrounding estate taxes can be difficult without the guidance of an estate planning attorney. Legal counsel might assist a surviving spouse with minimizing future tax liability and other advice.