By Paul Morrone CFP®, CPA, MSA
Estate and gift taxation, and all its inherent complexities, is a favorite target of regulators at both the Federal and State (if applicable) level. Changes to these regulations are often baked into much larger pieces of legislation and often do not receive the same publicity as the headline issues addressed by new laws. One common blind spot that is often overlooked may impact older trusts due to a Federal law enacted in 2010 when the Bush administration created the ‘portability’ election for use between married spouses. This provision allows a surviving spouse to treat any unused portion of their deceased spouse’s exemption (i.e. the dollar value of their estate assets not subject to estate tax) as their own, provided proper planning and administration occurs at the death of both spouses. Many wills/trusts drafted prior to 2010 may not contain the appropriate language allowing the trustee to take advantage of the portability election which can result in an exemption amount that may be permanently lost.