I frequently get calls from clients or financial advisors asking me to share updates on the newest estate tax law issues. This year, those conversations revolve around actions taken by the IRS last year, in adopting regulations regarding portability.
In the years prior to the adoption of the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010, spouses could leave one another as much as they wished without
triggering an estate tax at the first spouse’s death because the Marital Deduction postponed the imposition of any estate taxes until the death of the surviving spouse. The 2010 Act became permanent law through the American Tax Relief Act of 2012, which was adopted January 2, 2013. Under the 2010 and 2012 Acts, the Marital Deduction was retained, but new provisions gave spouses the ability to transfer any unused estate tax credit from the first deceased spouse’s estate to the estate of the surviving spouse. The right to transfer the unused credit is
called “portability.”