Estate Tax Changes - Third Quarter 2017 | Trust Point
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Estate Tax Changes – Third Quarter 2017

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Updated October 5, 2017

Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.

Estate Tax Changes

Time Extension for Estate Portability Elections

In a new revenue procedure, the Internal Revenue Service (IRS) has provided a simplified method for non-taxable estates to obtain an extension of time to make the portability election. The new method will be available permanently.

The portability rule, first enacted in 2011, allows a married decedent’s unused estate tax exemption to pass to the surviving spouse. With the exemption now at $5.49 million per person and increasing annually for inflation, this unused exemption is much more common and increasingly important for married couples.

Since the introduction of portability in 2011, it has been challenging for non-taxable estates to make the portability election. Many small estates didn’t file the required Form 706 since they were below the filing threshold. However, to elect portability, the form was required with a “timely led” estate tax return.

The new method allows small estates to make a late retroactive election. They must file the Form 706, including a required statement at the top of the form, by the later of January 2, 2018 or the second anniversary of death. A Form 706 led in this manner will be considered to have been timely led for purposes of the portability election. Take corrective action now if a portability election was missed!

State Estate Tax Declining

Delaware’s state legislature has approved a bill to eliminate the state’s estate tax, beginning with deaths occurring in 2018. This continues a trend of states eliminating their death taxes; New Jersey’s estate tax also will disappear after this year.

Currently, 18 states plus the District of Columbia levy an inheritance tax, estate tax, or both. Minnesota is one of the 13 states that impose a state estate tax. Wisconsin does not levy either an estate or an inheritance tax. For retirees with large estates, choosing a domicile sometimes has been an important financial decision. Reducing or eliminating state death taxes may help to keep retirees from relocating.

Are you curious about how the estate tax changes will effect you? Contact us today to learn more.

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Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.