Probate & Trust Law Section Conference Manual ... - Minnesota CLE

) If a timely return is not filed, the election must be made on the first
federal estate tax return filed after the due date.
3) Must qualify as marital trust under I.R.C. §2056: The trust must also qualify
for the federal estate tax marital deduction under §2056(b)(5) (life estate with power
of appointment), §2056(b)(7) (qualified terminable interest property, including joint
and survivor annuities under §2056(b)(7)(C)), or §2056(b)(8) (surviving spouse is the
only noncharitable beneficiary of a charitable remainder trust), or meet the
requirements of an estate trust as defined in §20.2056(c)-2(b)(1)(i) through (iii).
Treas. Reg. §20.2056A-2(b).
d. Carefully review the regulations under I.R.C. §2056A before drafting a QDOT and
before making a QDOT election.
B. Marital Estate Planning Options
1. “Portability Planning”—Is this an option?
a. The American Taxpayer Relief Act of 2012 signed on January 2, 2013, made
permanent the ability of a surviving spouse to elect to claim the deceased spouse’s federal
estate tax exemption. This is the “DSUEA” election or the portability issue that is now
available.
b. Some discussion is occurring regarding whether this should be a new option in the
marital planning realm. Specifically, should we now draft into marital plans that we will have
a “portability plan” where we do no other tax planning on the first death but rather simply plan
to elect to claim the DSUEA of the first spouse to die.
c. One sample language from Howard Zaritsky in January 2013:
Deceased Spousal Unused Exclusion Amount Election. I direct that the personal
representative of my estate do all things necessary to make a valid election to allow
my surviving spouse to have the benefit of my deceased spousal unused exclusion
amount, to the greatest extent permitted under applicable federal estate tax law. My
surviving spouse shall have no obligation to make any payment to my estate or to the
other beneficiaries of my estate in order for the personal representative of my estate to
make or because the personal representative of my estate has made this election, nor
shall any equitable adjustment be made with respect to the dispositions under my
estate because the personal representative of my estate has made this election.
d. Whether this will become an affirmative planning option as part of a widespread
standard of practice is not yet known. If you choose to do “marital portability planning,” the
drafting may look something like the following in combination with the above language from
Mr. Zaritsky:
I leave my residuary estate to my spouse if she survives; except that if
at the time of my death no election is available for my spouse to claim
my remaining federal estate tax exemption pursuant to a DSUEA (or
similar) election, then instead my estate shall be distributed as
follows:
4