Many people who do not have to pay the federal estate tax are unaware that there is still a benefit to the spousal election that might benefit them in the future.
When talking about the estate tax exemption limit, estate planning attorneys often discuss two different numbers. They mention the individual exemption amount and the married couple exemption amount, which is double the individual number.
The reason they do this, is because of the spousal election.
When one spouse passes away, the surviving spouse can take what is called a spousal election which will give them the married couple's exemption limit when they pass away. It can be complicated. However, it effectively means that the estate of the first spouse does not pay any estate tax.
The surviving spouse inherits almost everything and gets a double exemption when he or she passes away. However, there is also another benefit to the spousal election that the NAEPC Journal of Estate & Tax Planning discussed in "Forget "Must Love Dogs" -- Go with "Must Love DSUE" or the Portability Election: Simplified Late Election Relief."
The details can get a little complicated, but the idea is relatively simple.
If the first spouse who passes away does not have a large enough estate to have had to pay the estate tax, then there is an unused portion of the exemption limit leftover. The surviving spouse can take advantage of that. However, it is also available for anyone the surviving spouse might marry later.
Some people are apparently even advertising that they have this deceased spousal unused exclusion available on dating sites.
If you did not take a spousal portability election when your spouse passed away and would like to now, there is a simple way to do so. However, there is a limited amount of time, so visit an estate planning attorney immediately.
For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: NAEPC Journal of Estate & Tax Planning (Oct. 2017) "Forget "Must Love Dogs" -- Go with "Must Love DSUE" or the Portability Election: Simplified Late Election Relief."