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CFP® Practice Question: Understanding Portability

In giving a talk to a small audience on the topic of estate planning, someone asks you, as a financial planner, to provide some clarifying comments regarding the recent portability of the Applicable Exclusion Amount between spouses. You would be correct in making any of the following comments EXCEPT:

  1.  While the 2012 Tax Relief Act made portability permanent, it has actually been around for some time, beginning in 2001.
  2.  Like the Applicable Exclusion Amount, the DSUEA that is received from a deceased spouse is adjusted annually for inflation.
  3. While there is portability for estate tax purposes, there is NO portability for GST tax purposes.
  4. The DSUEA received from the estate of deceased spouse #1 will be lost if the surviving spouse remarries and is subsequently predeceased by spouse #2.
  5.  The surviving spouse’s estate tax exclusion amount is equal to their “basic” exclusion amount plus their DSUEA.