Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success (The Retirement Researcher Guide Series)

by Wade Pfau

Since 2011, unused exemption amounts can be passed to a US citizen spouse, using a concept called portability. To take advantage of this portability between spouses, an estate tax return (IRS Form 706) must be filed within nine months of an individual’s death, even if no estate tax is otherwise due. This process effectively doubles the exemption to $23.4 million for a couple in 2021. Estate taxes are due only if the net value of the estate exceeds these exempt amounts. An estate tax return must be filed if the gross value of the estate exceeds the thresholds, even if the net value after deductions is less. For asset values exceeding the exemptions, estate tax rates range from 18 percent to 40 percent. The 40 percent rate applies on any amount of the taxable estate above $1 million.