NEW REQUIREMENTS FOR LATE PORTABILITY ELECTIONS

The death/estate tax is a tax on the value of a person's estate. There is no NC state death/estate tax, but there is a federal death/estate tax. However, the federal death tax only applies if the estate value is over $12.6M per person as of 2022. [This higher value was put in place in the 2017 tax act and is indexed for inflation. However, under current law, the higher value will revert to the old exemption amount in 2025, unless extended, but still indexed for inflation.]. So, for most people, the estate tax is not a concern.

Portability is a concept that allows the surviving spouse to use not only their $12.6M exemption amount but also the unused portion of their deceased spouse’s exemption amount, subject to certain requirements. If so used, the couple thus has the ability to shield $25M+ from the federal death tax. 


The principal requirement for portability is that an estate tax return is filed for the first-to-die spouse and a portability election box be checked on the return. Note, this is required even though the value of the first-to-die spouse’s estate is not in excess of the exemption amount, and, therefore, there is no requirement to file a death tax return or pay any tax. So, if the couple's combined estate value is approaching the exemption amount, or perhaps the lower exemption amount assuming the higher exemption amount is allowed to expire in 2025], it is wise for the surviving spouse to make the portability election upon the death if the first spouse to die.

If the surviving spouse forgets or does not know to file a return for the first-to-die spouse and check the portability box, the IRS previously allowed a late return/portability election to be filed as long as it was filed within 2 years of the first-to-die spouse’s death. Pursuant to a new Revenue Procedure issued by the IRS, the delinquent return/election can now be filed by the 5th anniversary of the first-to-die spouse’s death. See Revenue Procedure 2022-32.

About the Authors

John Cocklereece headshot

John A. Cocklereece, Jr.

John Cocklereece concentrates his practice on property tax appeals, business law, tax controversies, and estate planning and administration.
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Attorney Travis Woolen

Travis Woolen

Travis joined Bell, Davis & Pitt shortly after graduating from law school. Focusing his practice on trusts and estates, he regularly advises clients regarding the preparation of simple Wills, Revocable Trusts, and Powers of Attorney, as well as more complex tax planning trusts and other documents to carry out his clients’ desires in a tax-efficient manner. Travis also regularly helps implement estate plans by representing fiduciaries in the administration of trusts and estates.
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