One of the advantages of working with a Fee-Only financial advisor is that you have a trusted resource to keep you informed of laws and regulations that affect your financial planning that you or the other professionals you consult with (including lawyers) may have overlooked. An example of this would the changes to laws regarding portability.
In “The Deadline Every Married Person (And Financial Advisor) Needs to Know About,” Forbes columnist Deborah L. Jacobs aims to make sure married couples are aware that:
“Starting for deaths in 2011, and now going forward, they can carry over the estate tax exemption of the spouse who died most recently and add it to their own.”
You can give your spouse as much money as you want while you live and in an estate plan and that money won’t be taxed as long as your spouse is a U.S. citizen. However, before 2011, it took foresight to make sure that the first spouse’s tax exemption was not lost when the second spouse died.
To take advantage of portability, “the executor handling the estate of the spouse who died must file an estate tax return (Internal Revenue Service Form 706), even if no tax is due…nine months after death with a six-month extension allowed.”
How does this play out in real life? A woman wrote to Jacobs asking for advice because while her father’s estate was “well under $5 million,” her mother’s was likely to be more but her father’s executor had not filed the estate tax return. The woman wanted to know if there was any way to recover that advantage or petition the government to restore her father’s lost tax exemption.
Jacobs points out that while it may seem “unlikely” that one spouse would have a sizable estate if the first passed away without one, you really never know what may happen.
Having a Fee-Only financial advisor on hand to help you with estate planning can make a big difference for you and your family.