Portability And Traditional Estate Plans

Last December Congress passed a new law related to the federal estate tax. Not only did it raise the federal exemption to $5 million per person, it created something known as portability. Now, a surviving spouse may use his or her deceased spouse's exemption even if no planning had been in place (i.e. an AB Trust, Disclaimer Trust, or Bypass Trust). So, does this change negate the need to take traditional estate planning steps? The speaker in a recent seminar says no, and I agree. Why?

1. portability is only in place through 2012;
2. it does not address States that have estate taxes; and
3. second marriages can throw a wrench into the situation.

An AB, Bypass or disclaimer trust could address all of these issues. As the speaker said, portability is the worst case scenario fix if no planning was done -- it should not be "plan A". For details on your specific situation, you should consult with a licensed, estate planning attorney in your state.