Portability makes it unnecessary for spouses to use bypass trusts solely to preserve the federal exemption amount. As with any new process there is a shakeout period, though.
The good news has resounded and there is much to celebrate with the passing of ATRA 2012 (or the Fiscal Cliff deal). One particularly positive element of ATRA 2012 is the continuation of certain estate and gift tax laws.
A recent Forbes article titled “A Married Couple's Guide To Estate Planning,” explores some important considerations when it comes to fundamental estate planning.
The fiscal cliff-bridging budget extended the provision known as “portability.” As you may know, portability is the ability to pack up the unused tax exemption of the first spouse – that is, their gift/estate tax exemption – and pass it on to the surviving spouse. The surviving spouse doesn’t have to worry quite as much about triggering the estate tax when they pass. Why? Because they now have everything they own plus everything their spouse left them, and all of it can be sheltered from estate taxes by the estate tax exemptions of both spouses. However to preserve the exemptions, an estate tax return must be filed.
The original article has more to say regarding how to secure this portability. For that matter, portability is also a limited achievement and a limited kind of protection between married persons.
There is more to “portability” and proper estate planning than meets the eye, so be sure to consult with your estate planning attorney on this matter.
Reference: Forbes (January 9, 2013) “A Married Couple's Guide To Estate Planning”[updated to ATRA 2012]