In prior articles, I discussed various provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which had a wide impact on estate planning strategies. This article will focus on the new concept of “portability” contained in the act as it relates to the use of the estate and gift tax exclusion.
A basic concept in federal estate and gift tax planning is the maximization of the use of the applicable exclusion amount, which represents the amount a taxpayer can transfer to beneficiaries free of federal estate and gift tax. The amount of this exclusion has increased over the years from $600,000 in the 1980s to $5 million in 2011 and 2012 pursuant to the provisions of the act.
