The estate tax, for all the talk it receives, affects few Americans due to the fact it takes $5.4 million to trigger the tax. As a result, very few estates will file a tax return which is exactly the right move almost every time. However, there is one catch to not filing, a surviving spouse cannot take the $5.4 million exclusion that the deceased spouse possessed unless a return is filed. As a result, any unexpected surges in wealth for the surviving spouse will only have one exception apply rather than the two and potentially cost millions. With this in mind, any planner should always make sure the estate files the return if there is any chance that the survivor will one day need the extra exclusion to protect assets at death. While this is an ultra rare occurrence, it should always be taken into consideration when evaluating a client’s potential needs.
See James Hamill, Relaxed Estate Tax Law Requires Warning, Albuquerque Journal, July 13, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
