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If you are a recent widow or widower who thought you missed out on the opportunity for your spouse's estate to make a portability election or perhaps did not think you had a need when your loved one died, the IRS has given you another chance. Earlier this month, the IRS provided a way for the estate of a decedent who was married at the time of death to make a late portability election through recently issued Revenue Procedure 2017-34. 

Since 2011, surviving spouses have benefited from the portability election available when the first spouse dies. The portability election allows the estates of married individuals to pass along the unused portion of their estate exclusion amount to their surviving spouse. The estate exemption was set at $5.0 million in 2011 and has increased with inflation to its current $5.49 million for 2017. By making a portability election, the decedent's unused exclusion amount becomes available for estate and gift tax purposes to the surviving spouse to use for transfers during their life or upon their death.

To make the portability election, the estate of the deceased individual had to file an estate return even if there was no requirement for filing. Often times, no estate return was filed and the window for making this election closed.

Now, these estates may make a late portability election by the later of Jan. 2, 2018 or the second anniversary of the decedent's date of death only if:

  • Decedent died after Dec. 31, 2010, was survived by a spouse and was a resident or citizen of the United States on the date of death;
  • Was not required to file an estate return based on the value of the estate and gifts made during the decedent's life; AND
  • Executor did not file an estate return within the required time.

Since January 2 is only six months away, it's important to act promptly if you want to consider taking advantage of this opportunity.

Contact your local UHY LLP professional.