The IRS is throwing a lifeline to taxpayers who missed an important deadline for estate tax purposes.
One of the newer and better provisions in tax law is that you can take advantage of any portion of the estate tax exemption that a deceased spouse did not use. This provision is known as spousal portability.
The estate tax exemption for an individual is currently $5 million, as indexed for inflation.
If your spouse's estate was worth $3 million, then your estate can have a total exemption of $7 million. Ordinarily, this extra exemption is only available if a timely federal estate tax return was filed for the deceased spouse's estate.
However, as reported by Business Management Daily in an article titled "Don't miss the boat on estate tax break," the IRS is offering a one-time exception to the normal rule.
As a result, if your spouse passed away in 2011, 2012 or 2013, then you have until December 31, 2014 to file the necessary paperwork and take advantage of spousal portability.
For many estates this is a very important exemption, especially as estate planning professionals continue to adapt to this relatively new law.
If you have any inkling that the estate tax might apply to your estate and your spouse passed away in the last three years, you should seek the counsel of an experienced estate planning attorney right away to take advantage of this tax break.
Reference: Business Management Daily (November 30, 2014) "Don't miss the boat on estate tax break"