Question

d.If Jane and John fail to take advantage of the portable estate exemption by forgetting to file IRS Form 706 at the death of the first spouse, will there be a tax liability this year, assuming the second spouse also passes shortly thereafter? Describe an estate planning strategy that can be used to minimize any estate tax liability in this situation.

Answer 1

Any asset that is transferred to a surviving spouse can be included in the spouse's taxable estate—unless it is spent or gifted during the surviving spouse's lifetime. Alternatively, if the surviving spouse remarries, the unlimited marital deduction may allow the assets to pass to the new spouse without the application of estate and/or gift taxes. In some situations, fewer taxes will be paid by using additional estate planning methods such as using exemptions or trusts.