What is Portability for Estate and Gift Tax?

TranscriptI’m Jean Carter, an ACTEC Fellow from Raleigh, North Carolina. With me is Steve Murphy, an ACTEC Fellow from Charlottesville, Virginia and our topic today is portability.Let’s start it off, Steve. What is portability?Hi Jean. Thanks for having me. Simply put, portability is a way for spouses to combine their exemption from estate and gift tax. More specifically, it’s a process where a surviving spouse can pick up and use the unused estate tax exemption of a deceased spouse. So then, the surviving spouse has both his or her own exemption from estate and gift tax but also, the unused exemption of the deceased spouse.Jean Carter: That sounds very useful. Steve, why don’t you give us a little background on the estate tax and how portability fits into that?Steve Murphy: Yeah, sure. So, there is a federal gift and estate tax and it applies to transfers during life and upon death. Every individual has an exemption from gift and estate tax that they can apply to transfers. Currently,...