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Time is Running Out to Make a Portability Election

October 23, 2014


Michele DeNuzzo Loughlin

The IRS has provided a simplified method to obtain an extension of time to make a portability election for estates of decedents with deaths occurring from 2011 to 2013. Recently, the IRS announced that for anyone who died between January 1, 2011 and December 31, 2013 and whose estate was not required to file a federal estate tax return and did not file a return to elect portability, the estate can go back now and file one. Even though the return will technically be late, this will be allowed as long as the requirements for relief are followed.

If you elect portability on the estate tax Form 706, then you will be able to transfer the decedent's unused federal estate tax exemption amount to the surviving spouse (the estate tax exemption amount is currently $5,340,000).   

These estates have until December 31, 2014 to make this election by actually filing a Federal estate tax return per the IRS’s procedural requirements.

To determine whether an election is appropriate for an estate requires an analysis of several important factors that need to be considered, including:

  • Size of the estate
  • Estimated growth of estate assets
  • Estimated inflation adjustment of federal exemption (the “portability” amount is NOT adjusted for inflation)
  • Life expectancy of surviving spouse
  • Whether the spouse plans on remarrying

In some cases, making an election could result in significant savings to the surviving spouse’s estate.

Even if it seems highly unlikely that a surviving spouse will be worth more than $5,340,000 when he or she dies, it is still a good idea to file a return because Congress could always change the exemption amount. In fact, not long ago the exemption amount was less than $1 million.

Finally, you should be aware that there are further complexities involving the exemption amount if the surviving spouse decides to remarry, so it’s important to discuss this consideration with an estate planner if this is a concern.

If you have any estates that require analysis to determine whether the portability election could benefit the surviving spouse, please contact a Trust and Estate advisor as soon as possible for an analysis.

For more information, please contact Michele Loughlin, or 860.570.6427.

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.


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