I recently read an October 15, 2008 article in the Wall Street Journal which discussed the presidential candidates' views on the federal estate tax - my dad showed me the article. It appears that both candidates favor making the estate tax exemption "portable," which means that the exemption would be transferable from one spouse to the other.
This would be a major change to the estate tax law. Currently, if the first spouse to die leaves all of his or her assets to the surviving spouse, the couple wastes one of the estate tax exemptions that is available to each of them. Currently, if a Louisiana couple wants to make certain that each spouse uses the maximum amount of their exemptions, they must either leave each other the lifetime usufruct, or they must set up trusts (either revocable living trusts or testamentary trusts), so that the first spouse to die's assets do not go directly to the surviving spouse.
Making the exemption portable would especially help couples that have the vast majority of their wealth in a company retirement account or an individual retirement account (IRA). The surviving spouse is often named the beneficiary of these accounts, which under our current system, overuses the marital deduction and unnecessarily lumps assets into the surviving spouse's taxable estate. Making the estate tax exemption portable may solve this problem since the surviving spouse will be able to protect "double" the estate tax exemption.
If you have questions about minimizing federal estate tax - particularly if you are a Louisiana resident - feel free to send me an email at paul@rabalaislaw.com
Paul Rabalais
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