The Estate Tax & Spousal Asset Transfers

The federal estate tax will be a factor for many additional Americans in 2013. Unless there are changes to existing laws the estate tax exclusion goes down to $1 million next year. (It is currently $5.12 million.)

Given this reality you may want to discuss your situation with a licensed Oklahoma City estate planning lawyer before the year comes to a close.

You may have heard that asset transfers between husbands and wives are not subject to the estate tax. As a result you may feel as though you need not concern yourself with the tax.

In fact you should look beyond this initial transfer if you are under the impression that you have nothing to worry about because you intend to leave your resources to your spouse.

How will your spouse want his or her estate handled? In most cases your children and grandchildren would be receiving inheritances. These transfers would indeed be subject to the federal estate tax if no steps were taken to gain estate tax efficiency.

Another thing to consider is the fact that the estate tax is no longer going to be portable at the end of this year. In an estate planning context “portability” refers to a surviving spouse being able to use his or her deceased spouse’s unused exclusion.

Because of this you may want to take steps to position your assets in a way that enables the full utilization of each respective exemption in spite of the lack of portability.

The bottom line is this: you can indeed leave behind assets to your spouse with no estate tax being levied on the transfers. However, you do have to consider the transfer of assets to the next generation. To do this effectively you would do well to seek legal counsel, especially in light of the coming changes to the estate tax parameters.

Larry Parman
Author, President and Founding Attorney
Parman & Easterday