President Obama has recently signed the Surface Transportation and Veterans Health Care Choice Improvement Act (Act) into law. The new statute, signed on July 31, 2015, will impose limits on basis increasing planning for surviving spouses. Portability rules have traditionally been a tool for a surviving spouse to use a deceased spouse’s spousal unused exclusion amount (DSEAU). The main issue is whether a portability election obtained under Internal Revenue Code Section 2010 could combine with a QTIP election under Section 2056(b)(7) to give the surviving spouse a date-of-death basis. Under the new rules “the use of an unnecessary QTIP election on the death of the first spouse to die doesn’t allow a date-of-death basis at the survivor’s death.”
See Rodney L. Goodwin, New Federal Law Limits Basis Increase Planning at Death of Surviving Spouse, Wealth Management, August 20, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
