The primary purpose of estate planning is ensuring that the people one leaves behind in Florida can benefit from the assets that a decedent worked a lifetime to accumulate. The thought of a good portion of those assets being eaten up by taxes can certainly be demoralizing (even to the point of causing some to question the purpose of dedicating any extensive amount of time to estate planning at all). Yet with the right amount of planning, one may be able to ensure that their estate avoids being taxed altogether.
The federal government has established an estate tax threshold (per Forbes Magazine, the threshold for 2019 is $11.4 million). If the taxable amount of one’s estate is less than that amount, it will not be subject to tax. Thus, there is already a good chance that many will never even have to worry about estate taxes at all.
Yet there may even be a manner in which an estate whose value exceeds the threshold amount can avoid taxes. One can gift an unlimited amount to their spouse without that amount being taxed. Therefore, one could leave their entire estate to a surviving spouse and avoid estate taxes. This prompts the question, however, of what happens if combining the value of one’s estate with that of the surviving spouse then pushes the value of the spouse’s estate over the threshold?
In such a case, the surviving spouse can claim the decedent’s unused estate tax exemption and combine it with their own. This would allow them to protect up to $22.8 million in assets from taxes. This process is known as estate tax portability. According to the Internal Revenue Service, to claim portability, one must simply file an estate tax return within nine months of their spouse’s death.