The Internal Revenue Service has issued another round of relief for executors who mistakenly forget or fail to file an estate tax return that elects portability. One of the major misconceptions with the portability of the estate tax exemption for surviving spouses is the method of acquisition. Many executors believe the exemption is automatic, while the reality is that it must be requested and the IRS notified of the decedent’s death. As an example of applicability, say Harry dies with $5 million in his estate which he leaves to his spouse, Wanda. Wanda has $5 million in her own assets. At her death, Wanda dies with $10 million in assets and owes an estate tax. An executor may now use the updated procedures to elect portability and avoid estate taxes. He may also make a claim for a refund of estate taxes if the statute for filing the refund is open. The IRS has made a few exceptions and allowances in the past to aid executors who have missed the filing deadline to request portability. As it stands now, the deadline is set at a hard two years after death.
See Ashlea Ebeling, IRS Ruling Helps Surviving Spouses Who Face Estate Tax Trap, Forbes, June 12, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) & Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
