estate exemption portability

[RWG1950]

I'm not well versed on this - only prepare 1040's - no estates, trusts etc. and do not generally get involved in estate planning issues.

at a recent tax seminar it was discussed that people who had not filed an estate tax return for a deceased spouse (because they were otherwise not required to do so) had not claimed the portable exemption of the deceased spouse - but have until 12-31-17 to do this .

I've had an elderly couple with a joint estate of about 2 million. husband passed away in June of 2013. no type of estate returns were apparently filed.

the surviving wife is now about 92 & in poor health (she has been in and out of hospice). her estate is currently less than 2 million and she has begun to consume significant amounts of it due to her ongoing need for in-home long term care with no LTC insurance as her policy's limits have been paid out.

no one knows what her investments might grow to be worth in her remaining lifetime but given her situation, age & that the estate exemption for her alone seems to be more than 5 million, I was wondering if anyone thought it a good idea for the wife (filing as her late husband's executor) to go thru the bother and expense of filing an estate return (prior to 12-31-17) for her deceased husband, in order to claim the portability of his unused estate exemption.

[mactoolsix]

When did her spouse die?

Under § 2010(c)(5)(A), a portability election is effective only if made on an estate tax
return that is filed within the time prescribed by law (including extensions) for filing such
return. See:Rev. Proc. 2017-34 https://www.irs.gov/pub/irs-drop/rp-17-34.pdf

no one knows what her investments might grow to be worth in her remaining lifetime but given her situation, age & that the estate exemption for her alone seems to be more than 5 million,

And keep in mind that as of Jan 1, 2018 the exemption will probably be 10.2Mil . . .

Mike

[mactoolsix]

Rereading the OP, (spouse passed June 2013) I believe the filing time has passed, however there have been many exceptions to the rule.

[RWG1950]

Rereading the OP, (spouse passed June 2013) I believe the filing time has passed, however there have been many exceptions to the rule.

maybe I have misunderstood the DSUE relief procedure under Rev. Proc. 2017-34 on this & you can set me straight .

I had thought that a form 706 could be filed by the estate's executor until the (later of) January 2, 2018 or the second annual anniversary of the death of the decedent by filing the form with "FILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER 2010 (c)(5)(A)" written across the top of it.
(assuming the 706 return qualifies for the simplified method under the requirements of Rev. Proc. 2017-34)

you think this is incorrect ?

anyway, the reason I posted the original comment was just to see if any other (more experienced than I) preparers would even think it's worth the wife's time and money to file a 706 for her late spouse - just to claim the exemption. thanks for your consideration on this & comment(s)

[mactoolsix]

Correct

From the form instructions:

Extension for executors filing to
elect portability.
Executors who did
not have a filing requirement under
section 6018(a), but failed to timely file
Form 706 to make the portability
election, may be eligible for an
extension under Rev. Proc. 2017–34,
2017–26 I.R.B. 1282. Executors filing to
elect portability, may now file Form 706
on or before the later of January 2, 2018
or the second anniversary of the
decedent’s death. For more information
see
Rev. Proc. 2017–34.

I would explain the possibilities to the family and leave the decision to them. They 706 for portability is simple, however I know some EAs charge the full fee.