At a Glance
Main Takeaway
A new IRS provision passed in July 2022 extends an estate’s time to elect the portability of a deceased spouse’s unused exclusion amount (DSUE).
Following a series of less effective methods for electing portability, this new ruling aims to simplify the process and allow those who have missed the original window to make a portability election.
Next Step
Learn about the new estate tax portability election relief and how to maximize your estate tax planning strategy and protect your assets for future generations.
Portability and Extensions
Portability, a relatively new federal estate tax law, allows the surviving spouse to use their deceased spouse’s federal estate tax exemption to protect their assets. The surviving spouse may shelter assets from gift and estate taxes with a portability election.
The IRS sets deadlines for how long after the decedent’s death an estate has to elect portability. Under previous law, an estate had up to nine months after the decedent’s death to elect portability.
Many estates missed this nine-month deadline. IRS Rev. Proc. 2017-34 offered estates two years following the decedent’s death to file a return to elect portability. However, the IRS quickly discovered that many estates were still missing the deadline, even with the extended deadline.
New Estate Tax Portability Election Relief
The new IRS revenue procedure (Rev. Proc. 2022-32) issued in July of 2022 increases the period within which an estate can make a portability election from two to five years after the decedent’s death.
Rev. Proc. 2022-32 has simplified the estate tax portability election process and allows more estates to elect portability by extending the election period.
An executor may choose portability on behalf of the estate by filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on or before the fifth anniversary of the decedent’s death.
To meet portability election criteria using Rev. Proc. 2022-32:
- The decedent must have been a United States citizen or resided in the United States on the date of death.
- The executor must not be otherwise required to complete an estate tax return under Sec. 6018(a).
- The executor must not have filed the estate tax return within nine months after the date of the decedent’s death (or extended filing deadline).
If the IRS later determines that your estate was already required to file an estate tax return, your grant of relief will be voided.
Rev. Proc. 2022-32 became effective July 8, 2022, superseding Rev. Proc. 2017-34.
Estate Tax Planning with Windes
Although the new IRS provision increases the time an estate has to elect portability of unused estate tax exemption to five years, it is crucial to work with an estate tax professional who can assist you with estate conservation by minimizing your estate tax liabilities and maximizing your deductions.
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