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New Portability Extension Rules

Posted on: July 24th, 2015
portability election ruleOur estate planning attorneys recently outlined the Internal Revenue Service’s (IRS) final rule on portability that applies to estates of decedents who died on or after June 15, 2015. One of the areas the IRS addressed applies to the eligibility of estates to apply for an extension of the portability election deadline.

Originally, if the estate tax return was filed without making the portability election, the surviving spouse would lose the right of election. The new rules provide a 15-month grace period after the estate tax return is filed for a surviving spouse to elect portability—however, this extra time is not available to all estates. (According to a recent piece in Forbes, some election applicants might even be granted portability well past this 15-month window.) Only estates that are not in excess of the exclusion amount ($5,430,000 for the 2015 tax year) are eligible for the extended time. All estates valued at more than the exclusion amount must follow the original rules or forfeit the right to elect portability. 

Surviving spouses who are concerned they might miss the opportunity to take advantage of their deceased spouse’s unused exclusion might attempt to handle this matter independently. If the estate did not exceed the exclusion, a surviving spouse might try to file the return to make the election themselves. However, federal regulations currently prohibit this (unless the surviving spouse was named executor). The IRS does not permit anyone other than the executor to make the portability election and file the estate tax return. Surviving spouses and executors should maintain clear communication about this matter to avoid losing the opportunity for election.

The executor must handle many critical tasks in addition to filing the estate tax return and making the portability election, many of which have strict deadlines. An executor’s job is often overwhelming and their errors—whether intentional or not—could leave them personally liable for tax consequences or more. Our estate planning attorneys offer estate administration in varying degrees. An executor might need to consult on a single matter, or their needs might be greater. Our attorneys can help executors ensure their duties are completed accurately and timely. 

Individuals who are concerned about the portability extension process and eligibility can contact one of our estate planning attorneys. The ever-changing nature of tax rules and regulations should prompt careful professional review of an estate, not only to ensure guidelines are followed, but also to help a surviving spouse take advantage of tax benefits available to them.

By Attorney Samantha Reichle
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