IRS Extends Deadline for Surviving Spouse to File Estate Tax Return (DSUE) Election

by | Jul 20, 2022 | BFM Insights

IRS Extends Deadline for Surviving Spouse to File Estate Tax Return (DSUE) Election

| wealth management  by Alisa Kim O’Neil, JD, CTFA, AEP®, CDFA®, Co-Chief Planning Officer

The 2018 Tax Act raised the estate and gift tax exemption to $11,180,000 for 2018 (thereby doubling the existing estate and gift tax exemption) and it has been increased each year since then. The current federal estate tax exemption is $12,060,000. Because of this increase, many estates have fallen under this exemption and were not required to file a federal estate tax return.

Surviving spouses were allowed to file a federal estate tax return for portability purposes by the second anniversary of the death of the deceased spouse. This filing gave the surviving spouse the ability to use the deceased spousal unused exemption (“DSUE”) in addition to his or her own exemption.

On July 8, 2022, the Internal Revenue Service released Revenue Procedure 2022-32. This new procedure extends the time allowed for the deceased spouse’s executor, in many instances, to elect portability of the DSUE amount from the two (2) to the five (5) year anniversary of the decedent’s date of death.

HOWEVER, this will not apply to all estates. The decedent will have to have been married at the time of death and meet all four (4) of the following factors for the revenue procedure to apply:

  1. The decedent died after December 31, 2010;
  2. The decedent was a U.S. citizen or U.S. resident at the date of death;
  3. The decedent’s estate is not required to file an estate tax return (estate value falls under the estate and gift tax exemption amount as of decedent’s date of death); and
  4. The decedent’s estate has not already filed an estate tax return.

If you have any questions, please contact a member of our Estate and Financial Planning Group:

Alisa Kim O’Neil – [email protected] or (617) 275-0313

Kathy Sablone – [email protected] or (617) 956-9712

 
Important: This alert does not contain any legal or tax advice. You should always consult with your attorney, accountant or other professional advisors before changing or implementing any tax investment or estate planning strategy.
 
IRS Circular 230 Disclosure: Pursuant to IRS Regulations, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
 
Professional Designation Minimum Requirements Disclosures:
 
AEP® – Accredited Estate Planner®. Minimum requirements for the AEP® designation include active practice for a minimum of five years within the following disciplines: accounting; insurance and financial planning; law; philanthropy; and trust services with at least one-third of the individual’s time devoted to estate planning. Additionally, one or more of the following professional credentials: JD, CPA, CLU®, CFP®, CPWA®, CFA, CAP®, CSPG, CTFA, MSFS and MST is required, along with three professional references and current membership in an affiliated local estate planning council.
 
CDFA® – Certified Divorce Financial Analyst®. Minimum requirements for the CDFA® designation include a bachelor’s degree with three years of approved on-the job experience along with successful completion of the CDFA® examination consisting of 150 multiple choice questions. 30 hours of continuing education is required every two years.
 
CTFA – Certified Trust and Fiduciary Advisor. Minimum requirements for the CTFA designation include 5 years minimum experience in wealth management, a bachelor’s degree and passing the CTFA examination. 45 continuing education credits are required every three years.