How changes in Bypass Trusts and Portability Rules could affect your Federal Estate Tax and Planning

While something of a ‘wait and see’ game, the portability rules governing a spouse’s unused estate tax exemption signed into (temporary) law in 2010 were all but guaranteed to become permanent in the new year. They provided an easier alternative to Bypass Trusts, which essentially became an extra step in securing estate funds that could otherwise, under the old rules, be taxed very heavily. As anticipated, the portability rules were signed into law permanently on January 2nd, 2013, under the American Taxpayer Relief Act, and Bypass Trusts are now much less necessary for ensuring the financial stability of your estate for you, your spouse, and your children.

The latest Taxpayer Relief Act has been permanently set at a baseline of $5 million, adjusted annually for inflation

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