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IRS addresses estate tax exemption portability

Estate planning professionals in Georgia and around the country will likely welcome news that the Internal Revenue Service has made it easier for a surviving spouse to receive the unused portion of the deceased partner's estate tax exemption. Under Revenue Procedure 2017-34, the executors of individuals who died in 2011 or later will have until January 2018 or later to make what are known as portability elections. The executors of estates of individuals who died on or after Jan. 2, 2016 have two years to make portability elections under Revenue Procedure 2017-34. The new rules went into effect immediately.

The estate tax exemption portability provision was originally passed by Congress in 2010, but lawmakers gave surviving spouses only a matter of months to elect to receive the unused portion of their deceased partners' exemptions. Under the 2010 rules, those who missed the deadline were required to petition the IRS for portability relief and pay a fee of up to $10,000. Before Congress acted, special trusts were used to prevent the unused portions being lost.

The individual estate tax exemption was raised to $5 million in 2011, and this figure has been adjusted every year since based on inflation. By 2017, the federal estate tax exemption had risen to $5.49 million. Any amount in excess of this exemption is taxed at the current estate tax rate of 40 percent.

The complex rules regarding the portability of estate tax exemptions are just some of the myriad regulations and provisions that experienced estate planning attorneys must contend with. A comprehensive estate plan can benefit heirs, reduce estate tax exposure and provide peace of mind, and attorneys may recommend that it be revisited often in light of changing circumstances and evolving tax laws.

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