What Married Couples Need to Know About the New Estate Tax Law

9:41 am Uncategorized

The new estate tax law comes with a wonderful break for spouses that kicked in on Jan. 1: portability.  Portability allows a surviving spouse to add the unused portion of their deceased spouse’s estate tax exemption ($5 million) to their own, enabling a married couple to pass on up to $10 million tax-free.

Here’s what married couples need to know about portability, extracted from a Forbes.com column by estate planning attorney and journalist Deborah L. Jacobs:

  • Portability applies only to those who die after Dec. 31, 2010.
  • Portability applies to lifetime gifts as well as assets that pass through an estate plan.
  • Portability is not automatic; the executor must pass the unused exemption on to the surviving spouse.
  • If a surviving spouse remarries, he or she can only use the unused exemption of the new spouse.
  • Portability does not apply to the exemption from the generation-skipping transfer tax.
  • Couples with estates of less than $10 million can now leave everything to each other without a bypass trust – although if you want to shield assets from creditors or benefit children from a previous marriage, a bypass trust is still a good tool to use.

Do you have more questions about how you can benefit from the new tax laws?  Contact our California estate planning law firm.

Your California legal and financial planning experts are at your service; Contact us today.

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