Portability technically means something that can be easily moved or carried. The term can be used in several contexts. For example, software portability means the software is easy to transfer to another computer. Portability of retirement and pension funds indicates that a worker may transfer retirement funds when taking a new job. In Florida, homeowners may move some or all of their homestead exemption benefit to a new, qualifying home under the Save Our Homes provision. Although the term is used in various ways, we’re only going to review portability as it relates to lifetime estate and gift tax exemptions
Tax law is complex. Calculating what we owe often depends on what exemptions or deductions are available. The following taxes are pertinent when considering portability:
If a deceased spouse still has some or all of their lifetime exemption, why file a tax return?
When the value of an individual’s estate falls below $11.18 million, the estate does not have to pay federal estate tax. So, the estate’s personal representative is not required to file a federal estate tax return. However, failing to file that return may adversely affect the surviving spouse’s estate.
To take advantage of portability, the deceased spouse’s unused exemption amount needs to be transferred to the surviving spouse. This is done through the filing of IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return.
John Mangan is an experienced Florida estate planning attorney who has been board certified in Wills, Trusts & Estates by the Florida Bar. At Law Offices of John Mangan, P.A., we help clients develop an estate plan that’s appropriate for their circumstances. Call us at 772-324-9050 to set up an appointment or use our Contact Form. With our office located in Palm City, we also assist clients in surrounding communities like Stuart, Hobe Sound, Jupiter, and Port St. Lucie.