More than a fancy word, there are two portability programs I discuss frequently with folks:
1. The Florida Portability Transfer of Homestead, where beginning in 2008 Florida homeowners can transfer (or port) the savings they’ve accumulated (known as the Homestead Assessment Difference) to another homesteaded property, up to $500,000.
2. The Federal estate planning device where in 2012 Congress made it possible for widows and widowers to carry over the estate tax exemption of the spouse who died most recently and add it to their own. The tax law refers to the sum carried over as the “deceased spousal unused exclusion amount.” In common parlance it has become known by the short-hand, “the DSUE amount.”
This enables married couples to transfer $5.34 million apiece ($10.68 million together) tax-free. This tax-free amount (AKA the “exclusion” or “exemption) will reach $6.58 million in 10 years and $8.95 million in 20 years, according to Bernstein Global Wealth Management.
As before, you can give an unlimited amount to your US citizen spouse, during life or through your estate plan with no tax applied; this is the unlimited marital deduction. Until portability became part of the law, without proper planning, when the second spouse died, anything above the exempt amount not going to charity would be taxed. In other words, the first spouse’s exemption would be lost.
To avoid that problem you either had to leave assets to someone other than your spouse, or set up a special kind of trust, called a bypass or credit shelter trust. Now it’s possible to rely on portability instead. Both the marital deduction and portability also apply to same-sex married couples.
For more information on how the Federal Estate Portability impacts your estate plan, please call The Law Offices of Odelia Goldberg at 954-832-0885 to schedule your consultation.