Were you late in claiming your deceased spouse’s estate tax exemption?

As discussed here before the exemption for the estate tax is now “portable” between husband and wife. For example, if a husband dies in 2014 using $2 million of his exemption instead of the full estate tax exemption of $5.340 million, then the surviving spouse could use her husband’s unused estate tax exemption amount of $3.340 IN ADDITION to her full estate tax exemption amount when she dies. However there MUST be a return filed for husband’s estate within 9 months of the date of husband’s death (or 15 months if extension).

It appears that many professionals missed the time period for filing such an estate tax return. Of course in such a case the surviving spouse is none too happy when she finds out that she lost a valuable asset ($3.340 million of estate tax exemption in our example equates to approximately $1.336 million in estate tax savings!). A lot of scrambling has taken place to to fie such returns late and, until recently, no explicit guidance was available to determine when and how you could successfully file a late return to elect such portability.

In the recent Revenue Procedure 2014-18 the Internal Revenue Service has provided a simplified method for certain taxpayers to make such a “portability” election and gave professionals relief with these late filed returns.

Advice: If your husband or wife predeceased you within the last 4 years and you know nothing about this concept called “portability”, then contact your professional and determine whether you should file such a return and whether this procedure will help you.
 
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