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What is the timing for portability and estate tax returns?

The portability election, or the right to pass on a deceased spouse's $5.25 million estate tax exemption to the surviving spouse, has to be made within a certain time frame. That time frame is tied to the filing of estate tax returns. Anyone can make the election, but the trick is to know when and how.

Most estates in Texas won't be required to file an estate tax return since they aren't over the exemption amount. Unfortunately, for those who are under the $5.25 million threshold, but want to file an election for portability, an estate tax return is required under the tax code. For estates that are over the exemption amount, an estate tax return must be filed within nine months from the date the decedent died. It is possible to receive extensions for this filing as well. 

The IRS believes that having to file an estate tax return in order to make the portability election will provide a more accurate amount of the unused portion of the deceased spouse's exemption. This way, there will be no need to go back sometimes years later to figure out the amount. The problem arises because there is no prescribed deadline to file an estate tax return for those who are under the amount of the exemption.

It may be beneficial for many in Texas to make the election for portability upon the death of one spouse. It may not be convenient to file an estate tax return, but the benefit gained from the filing may be worth it. Filing estate tax returns can often be complicated. Having advice regarding whether the election is worth filing a return, as well as assistance with probate matters, can make the process go much more smoothly.

Source: Forbes, "Estate Tax Portability -- what is a timely filed estate tax return?" Lewis Saret, Aug. 7, 2013

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