The IRS has finally issued guidance for handling the portable estate tax exemptions. After the passing of the first spouse, the surviving spouse can absorb any unused exemptions allowing for larger tax free lifetime gifts or bequeath additional assets free of estate taxes.
These estates electing to take the portability of the unused exemptions are required to file Form 706. This in accordance with the new IRS regulations; even if the estate is valued at less than $5 million for 2011 and $5.12 million in 2012. The Forms 706 need to be filed timely.
The Service in an attempt to ease the burden, will allow executors of nontaxable estates to estimate the value of assets shown on the return. Form 706 and its instructions are to be revised shortly to provide ranges of dollar values that executors may use.