Understanding the Basics of Portability in Estate Planning

Estate planning can be a confusing subject, but it does not have to be taboo. Everyone should take the time to determine who will get heirlooms like the family china. Additionally, when you have others relying on you to provide for them financially, steps should be taken to ensure they can continue to function in the event of death or disability. In reality, this preparation is just one tool to help you protect your family. It covers your instructions for how your property and interests need to be transferred to your heirs and beneficiaries.

There are various aspects you need to consider, including property, real estate, personal effects, insurance policies, retirement savings, bank accounts, and stocks. Waiting at the end of all these plans is Uncle Sam with his hand out, ready to collect his portion of your estate!

Different plans can be used to reduce your overall tax liability. In 2010, a provision in the federal tax laws—called portability—was added.

Basics of Portability

While it is important to discuss the specifics of using the portability election with your attorney or CPA, here are the basics you should know so that you are better equipped.

  • What it is – The portability election is the right of a surviving spouse to claim any unused portion of their deceased spouse’s federal estate tax exemption. The surviving spouse can add that unused portion to their own exemption balance.
  • How it is taken – To utilize this election, the surviving spouse must file Form 706, also known as the United States Estate (and Generation-Skipping Transfer) Tax Return.
  • When it can be taken – Timing is critical to any federal tax return, and Form 706 is no different. This form is due on or before nine months after the date of death of the deceased spouse. An automatic six-month extension can be requested.
  • What estates are subject to it – The portability election applies to estates of decedents who died on or after January 1, 2011.
  • What to do if an estate plan already exists – If you already have one in place, it is vital that you speak to your attorney to decide what changes, if any, need to be made.

Planning is crucial to secure peace of mind for those left behind after your death. Even if you do not believe you have anything to leave behind, other aspects should be considered.

Work with a Trusted Insurance Company for Your Estate Planning Needs

Since 1984, The Nowell Agency has helped families and companies to protect their homes, lives, businesses, and more. We will work with you to find the best products to fit your particular needs and budget. Leave your family financially protected and stress-free by ensuring that there are no grey areas and question marks about distribution of your legacy upon your death.

Request a quote online or call an office near you to schedule a meeting with a knowledgeable and professional broker at The Nowell Agency.


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    Portability Election In Estate Planning | Nowell Agency, Inc.