New IRS Estate Rules May Pose a Problem

Posted on Oct 26, 2011

The IRS has clarified estate rules affecting those who die in 2011 and 2012. According to a Wall Street Journal report, the new rules may be problematic for some people.

In December 2010, the estate tax was reinstated and the amount exempt from the tax was raised to $5 million for individuals and $10 million for married couples. There was also a "portability" provision, allowing surviving spouses to rollover part of the deceased's exemption that had not been used.

In an effort to preserve the spouse's exemption, executors are now required to file an estate tax return that lists assets and the value of those assets, despite how minimal the value may be.

Since estate tax returns have a deadline of 9 months after the death, the deadline may have passed for someone who passed away in January. However, you could request a 6-month extension, but you'd be held accountable for interest on any taxes owed.

Married couples who left everything to each other once faced the dilemma of losing the estate tax exemption upon the death of a spouse. When the 2009 exemption was $3.5 million, for example, the survivor could shield only $3.5 million from the estate tax. The solution involved special trusts, considerable planning, and sometimes significant legal fees. 

The new requirement could be problematic because advisers don't always file federal returns if the exemption amount is more than the value of the estate
but, even small estates must file a return to hold onto unused exemptions.

Help from an Estate Planning Attorney in Fort Myers is Just a Phone Call Away

Fort Myers estate planning attorney Matthew A. Linde understands firsthand the importance of careful estate planning and the complexities of financial legal matters, such as probate, tax litigation and guardianship. For help with your estate planning concerns, contact our Fort Myers office to schedule a one-on-one meeting with a professional who can answer your questions - 239-939-7100 or 844-764-5492.