The portability clause does not obviate the need for a bypass trust: - Portability clause only in effect for two years
- Relying on portability, rather than setting up a bypass trust, does nothing to address asset appreciation. If a trusts holds the $5 million exemption, the beneficiary receives the $5 million plus appreciation free of estate taxes.
- Relying on portability alone does not afford the creditor protection that a trust can provide
- Even if portability is extended beyond 2012, its utility could be reduced by future changes in the exemption amount or by divorce and remarriage.
Portability is a "a safety net that is not 100% safe."
Attribution: Pitfalls Of New Estate Tax Portability, Private Wealth
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