What is Portability in Estate Planning?

Estate planning is all about protecting your family’s financial future. One important tool that helps married couples reduce estate taxes is portability. But what is portability in estate planning, and how can it help you and your loved ones? Gudorf Law Group, LLC has years of experience helping Ohio families take advantage of portability and other key estate planning strategies to secure their legacies.

What Does Portability Mean in Estate Planning?

Portability in estate planning refers to the ability of a surviving spouse to use their deceased spouse’s unused federal estate tax exemption. This means if one spouse passes away without using their full exemption amount, the surviving spouse can apply the remaining portion to their own estate. This can significantly reduce or even eliminate federal estate taxes for a couple, allowing them to leave more of their assets to their heirs. Gudorf Law Group regularly helps clients understand how portability applies to their unique financial situations.

Portability was introduced as part of the 2010 Tax Relief Act and later made permanent through the American Taxpayer Relief Act of 2012. Before portability, couples had to set up complex trusts to ensure both spouses’ estate tax exemptions were fully used. Now, portability allows a simpler and more flexible approach to minimizing estate taxes. Gudorf Law Group keeps clients informed on current tax laws to ensure their estate plans take full advantage of available benefits.

How Does Portability Work in Estate Planning?

Portability in estate planning only applies to married couples. If one spouse dies, their estate may not be large enough to use the entire federal estate tax exemption. Instead of losing that unused portion, the surviving spouse can claim it by filing an estate tax return within a certain timeframe. This can make a significant difference in reducing tax burdens. At Gudorf Law Group, our knowledgeable estate planning team guides clients through the legal steps to ensure they maximize every estate tax benefit available.

The estate tax return must be filed within nine months of the first spouse’s passing, though a six-month extension is available if requested on time. Even if the deceased spouse’s estate does not owe taxes, filing this return is crucial to securing portability benefits. Many families overlook this step, which can result in a lost opportunity for significant tax savings. Gudorf Law Group works closely with clients to ensure all necessary paperwork is completed correctly and on time.

What Is Portability in Ohio Estate Planning?

In Ohio, portability follows federal estate tax laws, as the state does not impose its own estate tax. However, this does not mean that Ohio families should ignore portability when creating their estate plans. Federal estate tax exemptions change over time, and without proper planning, families could face unexpected tax burdens. Gudorf Law Group helps Ohio families navigate these changes and implement strategies to preserve their wealth across generations.

For 2024, the federal estate tax exemption is over $13 million per individual, meaning a married couple can protect more than $26 million from estate taxes through portability. However, these exemption amounts may decrease in the future. Proper estate planning now can prevent financial stress for your heirs later. Gudorf Law Group stays up to date with tax law changes and helps Ohio families plan accordingly.

Why Is Portability Important for Your Estate Plan?

Portability helps couples maximize their estate tax exemptions without needing complex trust structures. It is especially helpful for couples with significant assets, as it allows the surviving spouse to retain more of their wealth tax-free. However, portability is not automatic. The estate of the deceased spouse must elect portability by filing an estate tax return, even if no tax is owed. Gudorf Law Group ensures clients understand and complete this crucial step.

Another advantage of portability is its flexibility. Unlike certain trust arrangements, portability allows the surviving spouse to use the exemption however they choose. This can be beneficial if financial circumstances change after the first spouse’s passing. Gudorf Law Group helps clients structure their estate plans to provide the best financial security possible.

Is Portability the Right Strategy for Your Family?

Not every estate will benefit from portability, and other strategies may be more effective depending on your financial situation. For example, trusts may still be necessary for asset protection, avoiding probate, or ensuring that wealth passes according to your wishes. The experienced attorneys at Gudorf Law Group evaluate each client’s circumstances to determine whether portability or another estate planning strategy best serves their goals.

Families with large estates may benefit from combining portability with other strategies, such as irrevocable trusts or charitable giving. Portability does not protect assets from creditors or ensure they are distributed according to specific wishes. Gudorf Law Group helps clients understand when to use portability alone and when additional estate planning tools are needed.

Contact Gudorf Law Group for Skilled Guidance

Portability can be a powerful tool for married couples looking to minimize estate taxes and preserve their wealth. However, making the most of this opportunity requires careful planning and timely action. Gudorf Law Group has extensive experience helping Ohio families with estate planning, including portability and other tax-saving strategies. Contact us today to schedule a consultation and ensure your estate plan protects your family’s future.

Proper estate planning gives you peace of mind knowing your loved ones will be financially secure. The compassionate and experienced attorneys at Gudorf Law Group are dedicated to helping Ohio families make the best decisions for their futures.