Estate Administration by the Use of the New Federal Tax Portability Option

HNWElder Law, Estate Administration and Probate, Estate Planning

By: Fredrick P. Niemann, Esq., a New Jersey Estate Planning Attorney

This is the first part of a three part series on credit shelter trusts and the new federal estate tax portability laws.

Does portability mean the end of the “Credit Shelter Trust”?

The answer is no!  The 2010 Tax Act has made it possible for the estate of a surviving spouse to make use of the unused estate tax exemption of his or her predeceased spouse. Some have suggested that portability makes it unnecessary to continue to draft estate plans that include credit shelter trusts.

Understanding portability involves understanding two new estate tax terms:  the basic exclusion amount and the deceased spousal unused exclusion amount (DSUEA).

The new $5million estate tax exclusion is available for people dying beginning January 1, 2011, and December 31, 2012.  Portability will exist only if both spouses die within the next 18 months.

A second issue may make use of his or her predeceased spouse’s exclusion, if the predeceased spouse’s estate files a timely estate tax return.  Advocates of using portability in lieu of credit trusts argue that portability reduces the cost of estate planning because plans relying on portability will be simpler documents to draft and the survivor will be faced with less post-death complexity because the number of trusts the survivor must contend with will be reduced.  Both assumptions are questionable.

In our next post we will discuss why.

For more information, please contact Fredrick P. Niemann, Esq. toll free at (888) 800-7442 or e-mail him at

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