{"id":1641,"date":"2013-06-18T18:24:00","date_gmt":"2013-06-18T18:24:00","guid":{"rendered":"http:\/\/ua-cpas.com\/?p=1641"},"modified":"2013-06-18T18:24:00","modified_gmt":"2013-06-18T18:24:00","slug":"us-estate-tax-when-filing-is-optional-but-advisable","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2013\/06\/18\/us-estate-tax-when-filing-is-optional-but-advisable\/","title":{"rendered":"US Estate Tax: When Filing is Optional but Advisable"},"content":{"rendered":"<p>Your beloved spouse has passed away.\u00a0 The last thing you need is extra paperwork.\u00a0 But\u2026sometimes completing an extra form can mean the difference in literally millions \u2013 $5.25 million to be exact \u2013 able to be passed\u00a0 free of federal estate taxes upon your death to your loved ones.<\/p>\n<p>Completing a US Form 706 (US Gross Estate Tax Return) allows a decedent who is married and does not fully use his $5,250,000 exemption, to pass his unused exemption (\u201cDecease Spousal Unused Exclusion or DSUE\u201d) to his spouse. This is known as portability.<\/p>\n<p>What does this mean in practical terms?<\/p>\n<p><!--nextpage--><\/p>\n<p>For example, let\u2019s assume that Harry and Harriet each have $5 million in their respective names. Harry dies and his will leaves his entire estate to Harriet. His $5.25 million dollar exemption is unused since bequests to a spouse pass tax-free. If Form 706 is filed and portability is elected, Harriet will now have a $10.5 million exemption.\u00a0 What makes it even more worthwhile is that Harriet now has choices:\u00a0 She can make gifts during her lifetime of up to $10 million without any gift tax consequence.\u00a0 When she dies the first $10 million (or remainder if some was applied to gifts) will not be subject to federal estate tax, regardless of to whom she leaves her assets.<\/p>\n<p>Now you might ask why worry about filing a Form 706, if between both spouses total assets are way under the $5.25 million threshold.<\/p>\n<p>Let\u2019s suppose that Samantha, who has $1 million in her name, dies and leaves her estate to Sam who has $2 million in his name.\u00a0 Should Sam file a Form 706 for Samantha\u2019s estate to preserve the DSUE, the unused exemption, even though his total estate will only be $3 million, not anywhere near the $5.25 threshold?\u00a0 Yes -and here\u2019s why\u2026<\/p>\n<ul>\n<li>No one knows the future, and Sam\u2019s wealth could increase during his lifetime.\u00a0 If his total assets increase over the federal threshold, he would be able to use the DSUE to pass on additional assets free of federal gift or estate taxes.<\/li>\n<li>There is talk in Washington of lowering the threshold amount.\u00a0 Regardless of any changes, once a Form 706 is filed, the DSUE amount is preserved, increasing the amount Sam can pass on free of federal estate taxes.<\/li>\n<li>Even if Sam decides to remarry, he would be able to preserve the DSUE (as one keeps the DSUE from the last deceased spouse), allowing Sam to gift or bequeath assets to others (up to the amount of the DSUE) free of federal gift or estate taxes.<\/li>\n<\/ul>\n<p>Here\u2019s what Harriet and Sam, the surviving spouses, need to remember\u2026<\/p>\n<p>In order to claim portability a Federal Estate Tax return (Form 706) <b>must <\/b>be filed even if the estate falls under the 2013 threshold of $5,250,000.\u00a0 No special schedule or election need be made.\u00a0 Simply filing the Form 706 elects portability.\u00a0 If an extension of time is required, fifteen months is given to file the Form 706 (nine months from date of death plus the six month extension).\u00a0 The Executor, not the spouse, is responsible for filing the US Form 706.<\/p>\n<p>So while filing an extra tax form might seem annoying, it certainly can be worthwhile.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Completing a US Form 706 (US Gross Estate Tax Return) allows a decedent who is married and does not fully use his $5,250,000 exemption, to pass his unused exemption (\u201cDecease Spousal Unused Exclusion or DSUE\u201d) to his spouse. This is known as portability.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,35,6],"tags":[65,71,195,203],"class_list":{"0":"post-1641","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-small-business-forum","7":"category-estate-taxes","8":"category-estate-trusts-guardianships","9":"tag-decease-spousal-unused-exclusion","10":"tag-dsue","11":"tag-tax-tips","12":"tag-u-s-estate-tax","13":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1641","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=1641"}],"version-history":[{"count":0,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1641\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=1641"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=1641"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=1641"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}