DO YOU SPEAK "PORTABILITY"? DISCUSSING CLIENTS’ ESTATE PLANS IN A NEW LANGAUGE

By Shirley L. Kovar, Esq.^*

I. YOU, YOUR CLIENTS, AND PORTABILITY

Since the advent of the unlimited marital deduction in 1981, estate planners have relied on the marital deduction-credit shelter trust ("A-B Trust") structure at the death of the first spouse. Congress is considering new estate tax legislation which may change that. A prominent Senate bill (SB 722), introduced by Max Baucus (D-MT), chair of the Senate Finance Committee (SFC), as well as several House bills, provide for "portability" of a deceased spouse’s applicable exclusion amount (AEA), allowing the surviving spouse to use any remaining amount without the necessity of an A-B Trust.¹ The legislation might be enacted as early as this year.

With portability, estate planners could avoid the automatic use of an A-B Trust for a substantial number of clients. Learning to use portability, however, is similar to learning a new language. Not only are there new words and definitions but, more important, the basic "grammar" of estate planning for many clients would change.