Pitfalls Of New Estate Tax Portability

[color=black][/color][size=medium][/size]There are several more pitfalls to portability that make retaining or using an AB Trust plan more practical:1. In order for portability to work, a proactive election must be made by the Executor on a timely filed estate tax return at the death of the first spouse. History has shown these do not work: QTIP election box and GST allocation elections are the examples of failed elections causing havoc. Many surviving spouses rely on the family CPA or attorney who may not be specialists in estate planning and may not get why an estate tax return must be filed when there is no taxable estate. Also, if all assets are owned in a trust, no Executor may be appointed.2. The leveraging power of the exemption trust (by-pass, family, or credit shelter trust)cannot be under estimated. I recall seeing a statistic that surviving spouses lived an average of 10 more years. That is enough for appreciating assets to double, so the potential is there for that trust to shelter $10 million or more, whereas anything over the deceased's $5 milion in the survivors estate would be subject to tax.3. There is currently no portability available for the various state estate/inheritance taxes. With no more credit available against the federal tax it is more important than ever to shelter any state estate tax exemption at both deaths and to take advantage of the leverage to shelter appreciation.Would love to hear more pitfalls as others consider this.