When it comes to estate planning, Texas residents often overlook the powerful strategy of electing portability of unused estate tax exemption. This technique can offer substantial benefits for married couples, ensuring their assets are passed on efficiently and securely. Attorney Stuart A. Green, based in Houston and serving clients across Texas as a Houston, TX estate tax lawyer, frequently advises on this essential yet underutilized option.
What Portability Entails
Portability allows the surviving spouse to inherit any unused portion of the deceased spouse’s estate tax exemption. For example, if one spouse uses $5 million of their $13.61 million exemption, the remaining $8.61 million can be transferred to the surviving spouse, offering significant tax savings.
Common Reasons Portability Is Overlooked
Many couples in Texas might overlook portability due to:
• Lack Of Awareness: Many are simply unaware of this option.
• Misconceptions: Some may believe their assets won’t exceed the exemption amount, ignoring potential future growth or inflation.
• Complexity: The process can seem complicated without proper guidance.
Real-Life Scenario In Texas
Stuart A. Green started his firm in 2021 and has worked with many people in Texas within this type of law. Imagine a couple, Sarah and Robert, living in Houston. Robert passes away in 2024, leaving an estate valued at $10 million. By electing portability, Sarah can add Robert’s unused exemption to her own. This means Sarah now has an estate tax exemption of $17.22 million, offering her significant tax savings and flexibility for future planning.
Steps To Elect Portability
To benefit from portability, specific actions must be taken:
• Filing An Estate Tax Return: The surviving spouse must file Form 706 (Estate Tax Return) for the deceased spouse within nine months of their death, with a possible six-month extension.
• Indicating Portability Election: The form must clearly state that the surviving spouse is electing portability of the unused exemption.
• Maintaining Records: Detailed records of the estate and the portability election should be kept for future reference.
Understanding The Basics Of Estate Tax Exemption
In 2024, the federal estate tax exemption is set at $13.61 million per individual. This means that if your estate is valued below this amount, it will not be subject to federal estate taxes. For married couples, the potential exemption doubles to $27.22 million, provided they elect portability of any unused exemption.
Advantages Of Electing Portability
Texas residents can gain several advantages from electing portability:
• Increased Exemption: Combining both exemptions can shield up to $27.22 million from estate taxes.
• Flexibility: This strategy allows for more flexible future estate planning.
• Peace Of Mind: Knowing a large portion of the estate is protected from taxes provides reassurance for the surviving spouse and beneficiaries.
Why Texas Residents Should Consider Portability
Attorney Stuart A. Green, who works with clients throughout Texas, emphasizes the importance of this strategy. He notes that Texas residents often have substantial assets, including real estate and business interests, which can grow significantly over time. Electing portability ensures that these assets are protected from federal estate taxes, providing long-term financial security for families.
Electing portability of unused estate tax exemption is a powerful tool for married couples in Texas. It helps protect assets from hefty estate taxes, ensuring financial security for loved ones. Texas residents are encouraged to be proactive in their estate planning, stay informed about their options, and seek professional advice from experts like Attorney Stuart A. Green in Houston. By considering portability, you can make a significant difference in your estate plan and secure a better future for your family. Licensed in Texas as well as Kentucky, Pennsylvania, and South Dakota, Stuart Green Law, PLLC is ready to help you with all things estate planning.