Palmer Rodak & Associates
Palmer Rodak & Associates
Certified Family Law Specialists State Bar of California Board of Legal SpecializationServing your Community for 19 Years
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Understanding estate tax portability

People in Oceanside have likely heard for years that there are only two inevitabilities in life: death and taxes. Oddly enough, these two topics are often related. People work their entire lives to accumulate assets to pass on to their children, yet then have to face the potential of paying Uncle Sam one last time through an estate tax. Yet a lot of incorrect information exists regarding the estate tax. For example, many may not know that according to the Tax Policy Center, as recently as 2011, only one of every 500 people who died in the U.S. that year had estates that were taxable.

The federal government has set an estate tax threshold which designates which estates will be subject to taxation. Forbes Magazine reports that threshold to be $5.49 million for each individual. Thus, one can gift money to a beneficiary up to that amount without it being taxed. Married couples can combine their exemptions to leave up to $10.98 million while still avoiding taxes. However, one must careful when doing this.

One is allowed an unlimited marital deduction which allows him or her to leave all of his or her estate to a spouse without it being taxed. However, doing so could then raise the value of the surviving spouse’s estate above the individual tax threshold, making it subject to taxes. The reason why is because one’s $5.49 million estate tax exemption is not automatically inherited; it must be claimed by the surviving spouse through a process known as portability.

When one’s spouse dies, he or she must then file an IRS Form 706 with his or her tax return. This allows him to her to claim the unused portion of the decedent’s tax exemption and then add its value to his or her own. 

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Palmer Rodak & Associates
Certified Family Law Specialists State Bar of California Board of Legal Specialization

Del Mar Office
445 Marine View Ave Ste 300
Del Mar, CA 92014

Phone: 858-356-4568
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301 Mission Avenue Suite 205
Oceanside, CA 92054

Phone: 760-712-3889
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