A major advantage of current federal tax law is that estate tax
exemption "portability" is now permanent. Portability
simplifies estate planning by allowing a surviving spouse to use
the deceased spouse's unused portion of the $5.34 million for
2014 ($5,430,000 for 2015) gift and estate tax exemption
amount.
This means that married couples can maximize the benefits of
their combined exemptions without the need for sophisticated estate
planning involving multiple trusts. However, for many people,
particularly the affluent, more-sophisticated strategies —
such as a credit shelter trust — might still be more
beneficial.
How Does Portability Work?
If one spouse dies and his or her estate tax exemption is not
entirely used at death, the estate can permit the surviving spouse
to use the deceased spouse's remaining exemption. The surviving
spouse can use that amount, in addition to his or her own
exemption, to make tax-free transfers during lifetime or at
death.
