If You Are A Recent Widow or Widower, there is Important
News From The IRS - Act Now To Save Your Heirs Thousands to Millions
of Dollars In Estate Taxes

As you may know, the present Federal Estate Tax Law ( 2011/2012) allows for a surviving spouse to carry forward the Federal Estate Tax Exemption available to his or her deceased spouse at his or her death.  This means, that if your spouse passes away in 2011 or 2012, that you might be able to "inherit" all or part of his or her $5 million dollars of tax exmption t protect your children or ther heirs.

However, this isn't as easy as it should be and you must be careful to protect yourself or you and your heirs will lose this valuable benefit.

To relize the benefits of this “Portability” provision, the Internal Revenue Service  does not require a surviving spouse to establish a credit shelter trust like those utilized in many estate plans in years past.  But, it is important to file some paper work that might not otherwise seem necessary or desireable.
In fact, while we have know since the start of the year that this imortant "portability" provision of federaal tax law existed, it was only in the last few days that the IRS issued an important notice.

The IRS Notice 2011-82 issued on September 29, 2011 explains that the executor of the first decedent spouse’s estate must timely file a Form 706 "on which the executor computes the deceased spousal unused exclusion amount ["DSUEA"] and makes a portability election."

The Internal Revenue Service makes it clear through its statement that "most (if not all) married decedents dying after December 31, 2010, will want to make the portability election."

This will mean that the surviving spouse or other executor of the surviving spouse’s estate might have to do a bit more work to prepare and file the federal estate tax return.  This will also involve a cost in legal fees.

However, the benefits for the future generation could be significant.  It is calculated that the additional $5,000,000 of federal estate tax exemption resulting from the portability election could result in a federal estate tax savings of $1,750,000.

Again, we believe it is important for virtually all surviving spouse’s to file for the Portability of their deceased spouse’s estate tax exemption.  While a surviving spouse’s estate value might be under the present $5,000,000 exemption per person, one of the following could happen:
1)  The surviving spouse’s estate value could rise significantly and ultimately exceed his or her exemption at his or her death.
2)  The Federal Estate Tax Exemption could be reduced below the surviving spouse’s estate value. (NOTE: It is currently scheduled to drop to $1 million by the start of 2013), or
3)  There could be a rise in the estate value and a decrease in the exemption amount.

Regardless of which of those occurs, the extra $5,000,000 of exemption that could be carried forward from the decedent spouse would go a long way toward protecting some or all of the second deceased spouse’s estate from the 35% tax that now would apply. That makes this step important and potentially very effective as an estate tax reduction technique.

While the preparation and filing of the Form 706 can be complex and time consuming it is likely well worth the effort when considering the potential tax savings.


For a decedent dying on January 1-3, 2011, the deadline for filing a 706 is Monday, October 3, 2011.

You may secure an automatic six-month extension by filing Form 4768 by the original due date for the 706.
Click on the link below to view or download a copy of this important Notice. http://www.irs.gov/newsroom/article/0,,id=246604,00.html

Also, if you have recently lost a spouse, it is important to update your own estate planning documents.

If you'd like to take a quick quiz to determine whether you other wise need an update, how much it will cost, where to get it done, and some tips to make your planning better just click the link below:

Getting a will and Updating a will or estate plan
David M. Frees, III
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Attorney, Speaker and Author