Portability: Making Use of the Deceased Spouse’s Exemption Amount
Description
Under current law, individuals have a high estate tax exemption. But if one spouse dies without using all of his or her remaining exemption, steps can be taken to allow the surviving spouse to pick up and use a deceased spouse’s exemption — the Deceased Spouse’s Unused Exclusion (DSUE) — through a process called portability. This can result in significant tax savings upon the surviving spouse’s death.
Yet the election for portability is not automatic. There are steps that must be taken and other nuances to consider in electing portability. The recent case of Rowland v. Commissioner illustrates potential pitfalls and the importance of following the applicable requirements to take advantage of this important election.
Rowland also serves as a reminder to review the estate plan to ensure it properly takes advantage of and recognizes the limits of portability and that processes are in place so that upon one spouse’s death, due consideration is given to whether to elect portability.
United States
