Portability Could Be Ending
By Matthew Crider, JD
Family Wealth Protection Attorney
If you are currently married with significant assets, you and your spouse have a very
limited time to save a lot of money, because after that it’s very likely that Congress will
change the rules now in existence and make dying much tougher on your loved ones in
terms of federal estate taxes. That is, of course, unless you take this moment – right
now -- to do some very creative planning that will lock in what’s called spousal
What is Spousal Portability?
Portability is the ability to pass one’s unused estate tax exemption to his or her spouse
upon death. It works like this:
The current estate tax exemption (at least until 2013) is $5 million. That means that if
you die with less than $5 million, you pay no estate taxes. Five million is a pretty high
number, so this exemption is very favorable. It gets even better. Since each spouse in a
marriage has a $5 million exemption, the total exemption available to the couple is $10
million. If one spouse dies and has an estate valued at only $3 million, the unused
exemption ($5 million - $3 million = $2 million) “ports” to the surviving spouse. He or she
can now leave an estate of up to $7 million without incurring any estate taxes.
Portability Hasn’t Always Been The Rule . . . And It Could Very Easily Go Away
The benefits of estate tax exemption portability are obvious. In short, it means that even
with little or no estate tax planning, a couple can very likely get away without paying any
federal estate taxes (though without planning, your heirs will have to go through a
lengthy and expensive probate process). All of these benefits will likely disappear in
2013, when it looks like the estate tax exemption will be reduced to $1 million and
portability could very well disappear.
That means you have two choices if you want to take advantage of current laws: Do
some planning that permanently takes advantage of the current $5 million portable
exemption before it disappears, or plan for you and your spouse to die before 2013 (not
the best option!).
There are a number of estate planning tools that allow for married couples to take
advantage of the current estate tax laws without dying, and that’s our preferred method
of operation. Of course, if you’re below the threshold of $5 million (or $10 million for
married couples), you still need an estate plan that will allow your loved ones to avoid
lengthy and expensive probate court proceedings.
Portability Could Be Ending
A little bit of planning can go a very long way, and there has never been a better time to
put a plan in place. It could literally be the difference between being taxed on millions of
dollars and letting those dollars pass to your loved ones 100% tax free.
Understanding What You Need
That’s what we do best. Our estate plans are customized to meet your needs. Whether
that means setting up a complicated network of trusts to avoid taxes or a more
simplified plan designed to avoid probate, we have you covered from A to Z. And we
want to get to know you. We share a wonderful sense of community with our clients,
and it’s our goal to help you plan today so that nobody has to worry tomorrow.
About Matthew Crider, J.D.
Matthew Crider formed Crider Law PC in 1999 so he could help
individuals and business owners by providing creative solutions and
be their trusted advisor and legal counselor. He serves his clients
by listening closely to their goals, dreams and concerns and
working with them to develop superior and comprehensive estate
and asset protection plans. His estate planning practice focuses on
preserving and growing wealth by providing comprehensive, highly
personalized estate planning counsel to couples, families,
individuals and businesses.