Estate Portability Election Extended

Estate Portability Election Extended

As all estate practitioners are now aware, IRC Section 2010(c) permits the estate of a decedent who is survived by a spouse to make a portability election, permitting the surviving spouse to apply the decedent's unused exclusion to the surviving spouse's own transfers during life and at death. The portability election may be made only by the estates of decedents dying after December 31, 2010.

 In Notice 2012-21 the IRS has granted qualifying estates a six-month extension for filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return.  This extension applies when the executor of a qualifying estate does not file a Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes) within nine months after the decedent's date of death, and the estate therefore does not receive the automatic six-month extension.  To obtain the extension, the executor must file the application for a six-month extension no later than 15 months after the decedent's date of death.  The Form 706 of a qualifying estate will then be due 15 months after the decedent's date of death.

Notice 2012-21 defines a qualifying estate as the estate of a decedent

  • whose date of death is after December 31, 2010 and before July 1, 2011;
  • who is survived by a spouse; and
  • whose gross estate does not exceed the $5 million basic exclusion amount for 2011.

An estate is not a qualifying estate if it effectively requested an automatic six-month extension of time to file Form 706 by timely filing Form 4768.

The notice was issued in response to concerns that executors of estates of decedents who died in the early part of 2011 did not have the necessary guidance regarding the portability election.  Specifically, executors of estates not large enough to file a Form 706 or the Form 4768 may have failed to realize the need to file a Form 706 in order to make the portability election.  These smaller estates now have the opportunity to make the election on a timely filed Form 706.

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