With budget uncertainty over ourheads, itâ€™s nice to know there are some laws that are (supposedly) set instone. The American Taxpayer Relief Act of 2012 (ATRA) has allowed us tobreathe a bit easier; however, many people still donâ€™t trust any tax lawclaimed to be â€œset in stoneâ€ by the Government.
When it comes to making estateplans, certainty is an essential. Any uncertainty can wreak havoc on even themost carefully crafted plans. One popular â€œpermanentâ€ part of estate planningunder ATRA is â€œportability.â€ Is it here to stay and can we trust it?
â€œPortability,â€ as you may wellknow, is the new ability of a spouse to pass their unused unified gift taxlifetime exemption and/or estate tax exemption on to their surviving spouse. Itgrew out of budget deals and then was made â€œpermanentâ€ under ATRA, also knownas the bridge over the Fiscal Cliff.
As a questioner over in a recentWall Street Journal Q&A (â€œIs Estate-Tax Portability Permanent?â€)pointed out, estate tax â€œportabilityâ€ is a great option but an act of Congresscould just as easily undo it. What then?
The general consensus is thatportability is probably here to stay and for a multitude of reasons. Assumingthat remains true, the key to portability is to separate myth from reality. Thefirst myth: portability is notautomatic? The first reality: it canbe rather complex, especially in terms of unintended consequences. For example,what happens when the surviving spouse remarries?
For the time being, perhaps you can breathe easier asto portability. The larger question, however, is what do you and your spousehope to achieve through your estate plan from both tax and non-taxperspectives?
For more information on Portability,contact IdahoEstate Planning and schedule aconsultation. Remember,good planning is no accident.