If your spouse died in 2011, 2012, 2013 or 2014, you can elect portability on an estate tax return. For a person with a surviving spouse who dies after January 1, 2011, the unused unified credit available to that person can be used for gift or estate tax purposes by the spouse. The due date for the portability exemption has been extended to the end of 2014. Internal Revenue Code Section 2010 allows the surviving spouse to use the deceased spouse’s unused exclusion amount. This section provides that an election to use this deceased spousal unused exclusion amount must be made by the executor of the estate on an estate tax return that is filed within the time required by law.

For example, if a man dies in 2014 leaving all his assets to his wife, then he does not use any of his exclusion amount for estate tax purposes. If the wife elects portability on an estate tax return, she can leave an additional $5.34 million to a non-spouse beneficiary without estate tax.

The decision on whether to elect portability is a complicated one. What if you have very few assets and are not concerned about having more than the $5.34 million current exemption amount, should you elect portability? What if you win the lottery before you die and have more than the current exemption amount? What if Congress lowers the exemption amount back to $600,000? That was the exemption back when I started practicing law.

For estates probated prior to 2014, there was a concern that it was too late to file the portability election. Unfortunately, there were valid reasons why many spouses did not take advantage of this benefit. Some did not learn about it in time, since the portability act was passed only weeks before it went into effect. This problem has been solved. In Revenue Procedure 2014-18, the Internal Revenue Service provides a method for obtaining an extension of time to file the portability election in cases where an estate tax return was not required on the estate.

This new provision also provides relief for same-sex spouses who did not make the election because their marriage was not previously recognized by the Internal Revenue Service. Executors of these estates will be able to make the portability election under Rev. Proc. 2014-18.”

This late portability method only works for cases where the deceased spouse died in 2011, 2012 or 2013 and it must be used before the end of 2014.

The cost of electing portability is low because the estate tax return has been simplified. The benefit can be significant.