I am pleased to have been interviewed for an article published this week in the Farm Journal Ag Web website about the importance of “electing portability” by a surviving farm spouse, which potentially may shelter nearly $13 million of assets from federal estate taxes if the election is timely made.
In an article published this week on the Farm Journal Ag Web website, Attorney Polly Dobbs was interviewed about the importance of “electing portability” by a surviving farm spouse prior to expiration of the high federal estate tax exemption, which is set to “sunset” at the end of 2025.
Currently in 2023, each spouse has a $12.92 million exemption from federal estate taxes. The amount of this exemption, however, is set to decline to approximately $6.6 million per person in 2026 under current tax law. Electing portability if a spouse dies before 2026 preserves the higher, nearly $13 million, exemption, and gives a cushion to shelter more assets from federal estate taxes upon the second death. Even after 2026, a portability election may provide important estate tax savings.
In order to elect portability, the surviving spouse must file a Form 706 with the IRS. This form typically must be submitted within 9 months of the death of the first spouse; however, there is still the possibility to elect portability up to 5 years after death by invoking relief under Revenue Procedure 2022-32. Whether and how to make a portability election following the death of the first spouse is an important conversation to have with your tax advisers.