Marital Deduction Planning and Portability: Problem Areas for Spouses, Second Marriages, QTIP Trusts, and Elections

Estate planning counsel and tax advisers have powerful tools to achieve significant estate and gift tax savings for clients. Marital deduction planning and portability provide counsel methods to protect increases in value between spouses' deaths and attain better income tax results.

Under current tax law, a person may leave property to their spouse, use the marital deduction, and elect to have the exclusion transfer to the surviving spouse. This results in the surviving spouse having more property in their estate, while also benefiting from their own exclusion and that of the predeceased spouse. Estate planners must carefully consider potential changed circumstances, second or third marriages, partners with children from current and previous relationships, and couples without children. All of which will determine which planning methods are appropriate for the client.

Under IRC Sec. 2056(a), to qualify for the marital deduction (1) the decedent must have been survived by a spouse, (2) the property interest must pass from the decedent to the spouse, (3) the property interest must be a deductible interest, and (4) the value of the property interest must be established.

The portability regulations require the executor of a decedent's estate to calculate the deceased spouse's unused exclusion and report the amount on the estate tax return to elect portability for the surviving spouse. Determining this amount involves a multi-step process for calculating the unused exemption amount under the regulations.

By walking you through real world examples utilizing the marital deduction and portability to maximize tax benefits for estate planning, our panel will examine the tax savings and other benefits of creating marital deduction and portability-based planning.

Listen as our panel discusses strategies and current problem areas in estate planning for spouses, types of marital deduction formula clauses, fractional shares, portability elections, and the computation and reporting of a deceased spouse's unused exclusion change to the deceased spouse's unused exemption.

1. Gift and estate tax overview: electing portability
   • Estate and gift tax savings
   • Mechanics of election
2. Marital deduction planning considerations
3. Portability and second marriages
4. Filing requirements and elections
5. State tax considerations

The panel will discuss these and other key issues:

• Gift and estate tax overview: electing portability
• Estate and gift tax savings
• Mechanics of election
• Marital deduction planning and pitfalls to avoid
• Calculating and reporting on Form 706 and 709
• State tax considerations

Learning Objectives

After completing this course, you will be able to:

• Establish whether portability elections are beneficial
• Ascertain how to maximize potential estate and gift savings when incorporating portability in an estate plan
• Verify eligibility for relief from missed portability elections
• Ascertain the simplified rules for estates filing Form 706 for the sole purpose of electing portability

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).