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More time for portability election for surviving spouse

Florida men and women who lost a spouse within the first six months of 2011 still have the chance to take advantage of a worthwhile estate planning measure. The United States Internal Revenue Service extended the deadline to file estate tax returns for widows and widowers with the option of making a portability election if their spouse passed away within the first six months of 2011.

Under federal estate planning laws, a certain amount of each person's assets are shielded from estate and gift taxes. With a portability election, the unused estate and gift tax exclusion from a deceased spouse can be transferred to the surviving spouse. This simply means that the surviving member of the marriage will be able to shield more of his or her assets from being hit by taxes.

The deadline extensive for this has been offered to married couples that have $5 million worth of assets or less. One of the spouses had to have died in the first six months of 2011. The executor of the deceased's individual's estate must file a Form 4768 to seek this extension. Normally, the executor of the estate has nine months following the individual's death to file the Form 4768 to request the extension. The Form 4768 can still be filed. The actual portability election is made with a Form 706.

Estate planners should now note that with the new deadline, both Form 4768 and Form 706 must be filed with the IRS no later than 15 months following the individual's death. Many estate planning experts would encourage widows and widowers to make the election. Even if an individual has few assets now, it could come in handy if unexpected wealth lands in his or her lap.

The federal estate tax was very much in limbo throughout 2010 because lawmakers allowed it to expire at the end of 2009. Congress finally extended the estate tax in December of 2010.

Source: Accounting Today, "IRS extends deadline on estate tax portability election," Michael Cohn, Feb. 17, 2012

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