Estate planning is meant to preserve and protect your wealth for future generations, but one costly oversight shows just how quickly mistakes can wipe away those intentions.
After Fay Rowland passed away in 2016, her husband attempted to use a tax provision called “portability,” which allows a surviving spouse to claim any unused portion of their partner’s estate tax exemption. This strategy can significantly reduce the tax burden when the second spouse passes away.
However, the IRS rejected the claim because the estate tax return was missing detailed asset valuations. That seemingly small omission proved devastating, saddling the family with an extra $1.5 million in estate taxes—money that could have gone to heirs.
This case underscores a hard truth: portability is not automatic. It must be properly elected, and the filing must be complete and accurate. Even if an estate falls below the federal filing threshold, securing portability can be a smart move, protecting against future tax exposure as assets grow in value.
Currently, the federal estate tax exemption is at a historically high level, but it is scheduled to decrease in the coming years. More families may find themselves unexpectedly subject to estate taxes due to market growth, property appreciation, or inheritances.
The lesson? Estate planning requires meticulous attention to detail. Forms must be filed on time, with every required document and valuation included. Working with an experienced estate planner or tax professional can help avoid costly errors and ensure your legacy is passed on as intended.
A single missed step can cost your family dearly. In estate planning, precision isn’t optional—it’s essential.
