Wealth Preservation, Trusts and Estates

If Your Spouse Dies in 2011 or 2012
You May Think That There
Is No Estate Tax Return Due

You Might Right And You Might
Be Surprised To Know You Should
Still File

Most people now know, that if they die during the calendar
year 2011 or 2012 that there is a five million dollar exemption
from federal estate taxes.

And, it would be logical to therefore assume, that if you lose a spouse
during 2011 or 2012, and if your spouse’s assets are less than
five million dollars, that you would not need to file a return.

In fact, that’s true.  You don’t have to file.

But, because of something called federal estate tax
PORTABILITY, you will certainly want to.

If you fail to file, then you do not “inherit” your deceased
spouse’s remaining credit amount.

Perhaps an example will help to make this strange idea
of portability a bit clearer.

If spouse A passes away and has three million dollars worth
of assets that pass directly to surviving spouse B who has
his/her own assets of one million dollars and they
also have 2 million of joint assets, the surviving spouse
ends up with assets totaling six million dollars.

However, if the surviving spouse fails to file a federal
estate tax return at the death of the first spouse, she only
has her own five million dollar exemption.

That amount will not cover the six million dollar estate
that she will have at her death.  One million dollas will
be taxable.

To avoid this result, all the surviving spouse has to do
is file the federal estate tax return at the death of the first
spouse.

Now this type of return can be expensive – as hiring
lawyers almost always is.  They are complicated, they are
time intensive, they require obtaining extensive amounts
of information about assets and their valuation, but
by filing the return she inherits the five million dollar
exemption of the first spouse and this alone might save
their children or heirs hundreds of thousands or even
millions of dollars of federal estate tax at the death of the
second spouse.

Complicated.  Yes.  Oversimplified here?  Yes.

But the basic theory is simple.  If a spouse passes away in
2011 or 2012 be sure to seek advice from a knowledgeable
a lawyer who keeps current in these matters about the need
to file a federal estate tax return.

For more information on this important topic read FORBES
on the federal estate tax and portability.

by:  David M. Frees III, JD
610.933.8069

dfrees@utbf.com

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This post was written by:
Douglas L. Kaune, Esquire
dkaune@utbf.com
610-933-8069

Many of us are wondering whether or not our Executors, Administrators, beneficiaries or Trustees will have to pay estate taxes at the time of our death. I came accross an excellent article in Smart Money that will help you answer the question, Will My Estate Owe Estate Taxes? This should help you get a better understanding of where you and your estate stand with regard to the possible tax issues at the time of your death.

There are also some excellent strategies to consider in helping to reduce the estate taxes owed by your estate. Some basic considerations mentioned are gifting, bypass trust planning, life insurance and life insurance trusts. If you have any questions in this regard please give me a call at 610 933-8069 or drop me an email at dkaune@utbf.com.

Douglas L. Kaune, Esquire

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OK. This is not a completely serious blog entry. But wait. Federal estate taxes and death taxes are a serious topic. Have you ever wondered why your family has to pay a death tax? Have you ever thought that the federal estate tax seems unfair or that you have already paid taxes many times already and wondered why they get taxed again at death?

Well, I was surprised to see that Whoopie Goldberg might agree with you. Take a moment and watch this brief discussion on abolishing the federal estate and all death taxes.

Just click this link to my Pennsylvania Estate Planners Blog ( a rich source of ideas, information, tips, and more for Pennsylvania residents who are either planning their estates, doing asset protection planning, or who are executors and trustees for others) and watch Whoopie on the View talking about death tax abolition.

For more ideas, information, strategies and tactics on estate planning, death taxes, asset protection, and estate administration for Pennsylvania residents you can also follow me on Twitter. Just click here to follow David M. Frees III on Twitter.

David M Frees III, Esquire
David is rated “Superb!” on the lawyer rating and information service AVVO.

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