Under the American Taxpayer Relief Tax Act of 2012, passed by Congress in the eleventh hour, an important but not well known provision allows married couples to take advantage of one another's leftover estate tax exemption. This is an important thing to know, because while estate tax "portability" is available to all, it is only available if it is claimed in a timely manner.
One of the great provisions under current tax law is that, in addition to the historically high gift and estate tax exemption amount of $5 million per person, spouses have the opportunity to take advantage of any unused portion of their deceased spouse's exemption amount.
In our previous post, we began looking at estate tax portability, which allows widows and widowers to carry over any unused portion of their estate tax exemption amount and apply it to their own estate at their death.
We have frequently mentioned on this blog that during 2010 and 2011, the estate tax exemption amount is at $5 million. Under the 2010 law raising the exemption amount, individuals can transfer up to $5 million during life or at death, free of tax.