Marital Deduction Portability

Senate Finance Committee Chair Max Baucus (D-MT) introduced the Taxpayer Certainty and Relief Act of 2009 on March 26, 2009. The tax bill includes a $2.3 trillion middle class tax cut package and also creates a freeze on estate tax rates and major estate planning modifications.  Read Greg Herman-Giddens blog post about it here.

In addition to freezing the exemption from the federal estate tax at $3.5 million. the special use valuation relief provisions is increased from $750,000 to $3.5 million.


As described in this excerpt from Greg’s post:

 “A change that will require modifications to most large estate plans is the proposal to pass “marital deduction portability.” If a surviving spouse passes away with an estate larger than the applicable exemption, he or she will be able to use the “aggregate deceased spousal unused exclusion amount. In order to use a portion of the first decedent spouse’s exclusion, his or her executor must make an election on that estate tax return. If the “Spousal Unused Exclusion” election is made, the surviving spouse may then use the remaining unused exemption.

If this bill becomes law, the full estate could be transferred to surviving spouse and he or she will have an estate exemption of $7 million.”

See Shirley L. Kovar, Esq’s testimony before the Senate Finance Committee on Portability of the Estate, Gift and Generation-Skipping Tax, April 3, 2008.  Ms. Kosar is an ACTEC fellow and Chair of ACTEC’s Transfer Tax Study Committee.  Ms. Kosar states: “In my view, portability may be the best estate tax planning idea for a surviving spouse since the unlimited marital deduction in 1981.”