Forced Filing

"Portability" of a decedent's unused federal estate tax exemption refers to the election to add the exemption of a "first to die" spouse that is not needed to reduce federal estate tax to zero to the surviving spouse's federal exemption. Availing the surviving spouse of this benefit requires the predeceased spouse's executor to file a federal estate tax return, even if the only purpose is to make the portability election.

In Matter of Estate of Vose, 2017 0K 3, Case Number: 115424 (Okla. January 17, 2017) the Oklahoma Supreme Court recognized the surviving spouse's ability to force the executor of the predeceased spouse's estate to file a federal estate tax return to make the portability election.

The Oklahoma court reached this result despite a pre-nuptial agreement in which the spouses waived all marital rights in each other's estate, stating that the right to force the election could not have been waived, since when the pre-nuptial was signed, the portability election had not as yet been created by the US Congress!

The Court also seemed to indicate that Portability may actually provide a pecuniary (ie, financial) interest to the surviving spouse. As with other emerging estate tax concepts (eg, valuable Digital Assets) if Portability does have value, it may need to be accounted for in the estate tax returns itself.

There is no doubt that Portability may result in lower federal estate tax for a surviving spouse's estate, and thus should be elected as a matter of course. In a second marriage, care should be taken to consider mandating, via decedent's Will, that the election be made.

This blog is not intended to constitute, and does not constitute, legal advise to anyone or any specific situation. See also our legal notices.