If you are married, and if you and your spouse are fortunate enough to be concerned about Federal estate taxation issues, then “portability” is a new concept you are likely to encounter in your research into estate planning.
For some years now, estate planning attorneys have used the Marital A-B Trust to help spouses minimize estate taxes on the death of the second spouse to die (“surviving spouse”). This type of trust allows the Federal estate tax exemption of the first spouse to die (“deceased spouse”) to be saved and used when the surviving spouse dies, thereby doubling the exemption of the surviving spouse.
Now there is new legislation in the works that will eliminate the need for this type of complex trust, in some circumstances, and simply allow the deceased spouse’s Federal estate tax exemption to be transferred to the surviving spouse automatically. This is the concept of “portability”.
In many situations, there will no longer be a need for a Marital A-B Trust. However, there will still be some families for whom the A-B Trust is still the better choice, as when there are children from a previous marriage, or one spouse has significant separate property, or the spouses want to pass property directly to grandchildren through their trust. Your estate planning attorney can discuss these situations with you and make recommendations based on your own unique circumstances.
