Portability of the Federal Estate Tax Exemption

July 2017

In your everyday life, the term “portability” means the ability to be easily carried or moved. However, in your estate planning, the term carries a different meaning as it applies to the federal estate tax exemption.

The current federal estate tax exemption amount is $5.49 million and the federal estate tax rate is 40%. Portability of this exemption between married couples means that if the first spouse dies and the value of the estate does not require the use of all of the deceased spouse’s federal exemption amount, then the amount of the unused exemption may be transferred to the surviving spouse.  This enables the surviving spouse to use the deceased spouse’s unused exemption plus his or her own exemption when the surviving spouse later dies. A federal estate tax return (Form 706) must be filed to elect portability and preserve any unused exemption.

A final thing to keep in mind is that portability applies only to the federal estate tax exemption, not to Minnesota’s estate tax.  In order to tax advantage of the exemptions for both spouses in Minnesota, careful planning is required.  If you have any questions about the concept of portability, FMJ’s Trusts & Estate attorneys are here to answer them.

This post was written by Trusts & Estates attorneys David Ness and Matt Jensen. If you have any questions or would like to discuss your estate planning options, contact David at david.ness@fmjlaw.com or Matt at matthew.jensen@fmjlaw.com.