Since we are coming to the end of 2012 with no resolution of the possible continuation of certain federal estate tax provisions beyond the end of this year, we wish to direct this blog to any survivor who lost his or her spouse in 2012 and is still within the statutory nine-month or extended time limit for filing a federal estate tax return for the estate of his or her deceased spouse.

Such a person may wish to consider filing a federal tax return for the estate of his or her deceased spouse even though such a return is not technically required because the estate of the deceased spouse is under the exclusion amount in order to take advantage of the portability provision that currently exists in federal law.

In a nutshell, a surviving spouse, by timely filing a federal estate tax return, can effectively capture the unused lifetime exclusion amount of the deceased spouse (a maximum of $5,120,000 in 2012) for his or her own use going forward. While there are a number of factors that go into deciding whether or not to take advantage of this opportunity which are beyond the scope of this blog, the surviving spouse should certainly discuss the subject with his or her tax adviser before the end of the year.

The one thing we do know is that this opportunity is scheduled to be phased out at the end of this year unless extended in some fashion. So this is an item that deserves careful and immediate attention.

Michael W. Margrave
mmargrave@mclawfirm.com
480-994-2000

Portability and the 2012 Surviving Spouse 1

Canadian Pacific steam special, Fall 2010 at Banff, Alberta