On January 31, 2014

Many families in Colorado may not fall into the mega-rich category of the 1 percent. However, it isn’t just the ultra-wealthy who have estate planning tools at their disposal to protect their assets. In fact, wealth-protection professionals taking part in the 2014 Heckerling Institute on Estate Planning in Orlando focused on portability becoming a permanent option for taxpayers in the American Taxpayer Relief Act of 2012.

Portability was hailed as a rule designed specifically to help the estate administration needs of the 99 percent of Americans who don’t have hundreds of millions of dollars or more. The concept allows surviving spouses to carry over their most recently deceased husband’s or wife’s estate tax exemption and add it to theirs. Its unsexy moniker is the deceased spousal unused exclusion amount. Most professionals refer to it as the DSUE amount. What this means is that couples can move $5.34 million each without any tax penalty for a total of $10.68 million when both accounts are considered.

The amount that is to be tax-free will be adjusted every year for inflation. Thus, the $5.34 million portable today will be $8.95 million by 2034. Portability sounded a big change in estate planning because spouses no longer have to use a bypass trust or retitle any assets in order to take advantage of some valuable financial instruments. Also, the change doesn’t affect the unlimited marital deduction, which means one spouse can give the other an uncapped amount with no taxes taken out of it.

Thoughtful estate planning may be of vital importance to leaving a legacy to one’s family. A living will and trusts are tools one generation can use to take care of later generations. A lawyer may be of service in drafting estate planning documents.

Source: Forbes, “Estate Planning For The 99%“, Deborah L. Jacobs, January 19, 2014

Categories: Estate Planning

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