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    Sep 1 12

    Estate Tax Filing Necessary to Preserve Portability

    Newport Beach Law Firm

    Internal Revenue Service in June issued guidance for an estate-tax law Congress
    passed late in 2010.

    The IRS recently issued new
    guidance on an important estate tax issue for married couples regarding the portability of individual estate tax
    exemption between spouses.

    Each individual is allowed to
    exempt a certain amount of asset value from estate taxation at death, currently
    $5.12 million. Portability is a new
    concept, introduced in 2012, to make it easier for a surviving spouse to
    utilize both their own exemption and that of their deceased spouse.

    Like most IRS regulations,
    however, there are important dance steps to follow in order to achieve the
    desired result. An estate tax return must be filed soon after the first
    spouse’s death, usually within nine months. If you miss this filing, you likely
    will lose the value of the first spouse’s exemption. This means the surviving
    spouse could only shelter about $5 million of estate assets from taxation,
    instead of the approximate $10 million value of the couple’s combined exemptions.

    You can read more about portability and the various estate tax
    consequences in a recent Wall Street
    article, “Avoiding Estate-Tax Traps.”

    Clearly, preserving both
    spouses’ estate tax exemptions is an important aspect of any comprehensive
    estate plan, even if your estate assets are far below the exemption amount.
    Why? Because we never know what twists and turns our lives may take, and a
    small estate today could grow through any number of possible circumstances over

    Contact Meier Law Firm to discuss all of your estate planning needs.

    Reference: The Wall Street
    (August 7, 2012) “Avoiding Estate-Tax Traps

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