|February 12, 2014|
Previously published on January 31, 2014
On January 1, 2013, Congress passed the American Tax Relief Act of 2012 (“ATRA”). One key provision of ATRA was to make permanent the portability of the applicable exclusion amount between spouses (“Portability”).
The applicable lifetime exclusion amount for 2014 is $5.34 million. Portability concerns permitting the first spouse to pass away to transfer his or her unused applicable exclusion amount to the surviving spouse to use for his or her gift and estate tax purposes. This transferred amount is known as the Deceased Spousal Unused Exclusion Amount (“DSUEA”).
The DSUEA is only available to the surviving spouse if a timely election is made on the deceased spouse’s federal estate tax return. This election is irrevocable. The estate of the first dying spouse will incur the cost of preparing and filing the federal estate tax return.
Estate planning opportunities do exist to take advantage of Portability.