Portability Overview

On January 2, 2013, President Obama signed the American TaxRelief Act of 2012, which makes portability permanent.

Portability allows the estate of deceased spouses to makeportability elections in order to transfer their unused estate tax applicableexclusion amount to surviving spouses, who can use it for their gift or estatetax purposes.

The applicable exclusion amount equals the survivingspouse’s basic applicable exclusion amount plus the aggregate deceased spousalunused exclusion (DSUE) amount.

The DSUE amount equals the lesser of either the basicexclusion amount or the excess of the “(a) applicable exclusion amount of thelast such deceased spouse, over (b) the amount with respect to which thetentative tax is determined under Code Sec. 2001(b)(1) on the estate of thatdeceased spouse.”

See Lewis Saret, Estate Tax Portability – New Paradigm forEstate Planning, Forbes, July 20, 2013.