Portability in estate planning refers to which concept?

• A. The ability to transfer unused exemption to the surviving spouse
• B. The ability to bypass tax entirely
• C. The ability to appoint to any beneficiary
• D. The ability to convert to a QDOT

Answer: (A)

Portability means the surviving spouse can use the unused portion of the deceased spouse’s federal estate tax exemption. When one spouse dies, any part of the exemption that wasn’t used to shelter that estate becomes available to the survivor. The surviving spouse can add that unused amount to their own exemption, potentially increasing the total amount sheltered from federal estate tax at the second death. This is typically claimed on the deceased spouse’s estate tax return and must be elect­ed by the deadline, even if no tax would otherwise be due. It lowers, but does not completely eliminate, estate tax liability and it’s different from arrangements for noncitizen spouses (QDOT) or the idea of appointing to beneficiaries.