With the changes in the tax law, most estates today are not required to pay federal estate taxes and that also means there is no need to file the estate tax forms. For many who fall below the threshold, it doesn’t make sense to pay a professional to file the estate tax forms. There are, however, important exceptions, and knowing the difference can make a huge difference for the estate when the second spouse passes.

The surviving, or second, spouse inherits the entire estate tax-free. An estate tax form must be filed if the deceased spouse’s estate is valued at more than $5.43 million, even though no tax has to be paid. If the estate is worth less than this amount, no estate tax form needs to be filed. What happens is this: most people don’t want to pay a professional preparer to file the form, so they don’t file it. But this is one piece of paperwork that should be completed. In “Relaxed estate tax law requires warning,” a reporter at the Albuquerque Journal explains why this form is well worth any fees.

The issue is that a surviving spouse can elect to take the deceased spouse’s estate tax exemption as well as their own. Thus, the surviving spouse’s estate will be able to protect twice the amount of assets. This is only possible if the estate tax form is filed and the election made on the form. What this means is that if there is a reasonable chance that the surviving spouse’s eventual estate will be worth more than $5.43 million, the estate tax forms should be filed for the deceased spouse’s estate. If they are not, then the surviving spouse’s estate may have to pay unnecessary taxes.

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.
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