Updated Rules Provide New Estate and Gift Tax Savings Opportunity

Recent tax developments may save substantial taxes for your clients’ beneficiaries (post-death).

Since 2010, a surviving spouse can claim their deceased spouse’s unused estate and gift tax credit shelter amount (“estate and gift tax exemption”) of $5,000,000 or more by filing a federal estate tax return (Form 706) within nine months after death to secure “portability” of the exemption. This election can substantially increase the surviving spouse’s federal estate tax exemption available at his or her subsequent death.

Now, IRS Revenue Procedure 2017-34 extends the time (previously nine months) for a surviving spouse to claim a deceased spouse’s unused exemption (“DSUE”) to the later of January 2, 2018, or the second anniversary of the decedent’s date of death.

This may benefit those that meet the all the following:

  • Married until one or both spouses died since 2010;
  • The combined total of assets exceeds $5,000,000; and
  • A federal estate tax return was not required / filed.

If clients, friends or family meet these conditions, you may want to discuss portability with them and their attorneys and accountants.