Does Your Estate Plan Include a Formula Funding Clause?
The gift and estate tax exemption is higher than it’s ever been, thanks to the Tax Cuts and Jobs Act (TCJA), which temporarily doubled the exemption...
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L&H CPAs : Jan 10, 2019 8:23:00 AM
To secure these benefits, however, the deceased spouse’s executor must have made a portability election on a timely filed estate tax return.
Unfortunately, estates that aren’t otherwise required to file a return (because they don’t meet the filing threshold) often miss the deadline. Several years ago, the IRS offered a simplified procedure for obtaining an extension, but it was available only through the end of 2014. After that, the only option was to request a private letter ruling from the IRS, a time-consuming, expensive process with no guarantee of success.
In 2017, however, the IRS made it easier (and cheaper) for estates to obtain an extension of time to file a portability election. For all deaths after 2010, IRS Revenue Procedure 2017-34 grants an automatic extension, provided:
• The deceased was a U.S. citizen or resident,
• The executor wasn’t otherwise required to file an estate tax return and didn’t file one by the deadline,
• The executor files a complete and properly prepared estate tax return on Form 706 within two years of the date of death, and
• The following language appears at the top of the return: “FILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER §2010(c)(5)(A).”
If your spouse predeceases you and you’d benefit from portability, be sure that your spouse’s estate files a portability election by the applicable deadline. Contact us with any questions you have regarding portability.
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