Is My Estate Required to File? Why You Should File an Estate Tax Return for Portability.

An estate tax return must be filed if the gross estate is valued at greater than $5.34 million for decedents who died in 2014 and $5.43 million for 2015. This includes assets such as real estate, life insurance proceeds, retirement accounts and investments. Even if the estate is under this exclusion amount you may want to still file an estate tax return for portability.

Every U.S. citizen has a lifetime exclusion that they can transfer gifts throughout their lives and from their estate upon death. As mentioned earlier this exclusion is $5.34 million for deaths in 2014 and is adjusted for inflation. The unused portion of this exclusion can be transferred to the surviving spouse, which is called portability. In order to transfer the exemption to the surviving spouse, the estate must file a tax return. The estate tax return is due 9 months after the date of death and a 6 month extension can be applied for.

You still may be wondering why you should file an estate tax return for a spouse. You may be thinking that the estate is well under the filing requirement of $5.34 million, let alone the $10.68 million with the portability. My response is always the same. You never know how much your estate will be worth in 5, 10, or 20 years down the line. You could win the lottery, start an extremely profitable business, or remarry.

This is why it is so important to file for the portability timely. Once your estate does become that large, you won’t be able to file for portability, and the exclusion would have been forfeited. Your beneficiaries could be losing upwards of more than $2 million of estate taxes that could have been avoided.

If you would like more information or have any questions, please contact Kyle Wolfer via Email or by calling 301-652-6700.