Given all of the effort and attention that you put into saving assets to pass on to your spouse, children and other heirs, the last thing you want to consider is having any of those funds eaten away by taxes. Yet there are many will tell you that since death and taxes are the only seemingly the only two certainties in your life, such a prospect may seem to be unavoidable. Indeed, many of those who come to see us here at Silvi, Fedele & Honschke for estate planning advice do so already assuming that their estates will be subject to tax. Like them, you may be pleased to hear that may not (and likely will not be) the case.
The federal government has established an estate tax threshold that excludes many estates from being taxed. Per Forbes Magazine, that amount is expected to increase from $11.2 million in 2018 to $11.4 million in 2019. What this means is that unless the total taxable value of your estate exceeds that amount, it will not be taxed. Because of this, very few estates are subject to tax each year. You could conceivably gift your spouse up to the threshold amount and not have any of it eaten by taxes.
Doing so, however, could end up simply delaying the tax by pushing your spouse’s total estate amount above the threshold. You can avoid this, however, be having your spouse claim portability. What this does is allow them to claim the unused portion of your estate tax exemption (thus allowing you jointly to protect as much as $22.8 million from estate taxes). To elect portability, your spouse must file an estate tax return indicating that intent the same year you die.
More information on preparing for the process of estate administration can be found throughout our site.