The temporary regulations issued by the IRS on how to elect to use a deceased spouse's unused estate tax exclusion will apply to married spouses where the first spouse has died on or after January 1, 2011. Thus, making the regulations retroactive.

Spouses can now use this portability elections to use the unused portion of their spouse's exclusion, up to $5.12 million for 2012, if they choose this election on an estate tax return. The tax return must be filed by the estate by the due date, which is 9 months from the death plus any extensions, even if a return had not been otherwise required.

This election must be made by the executor, but if there is no executor, any person in actual or constructive possession of property of the decedent may make this election. This person, or the executor if one is appointed, is required to calculate the amount of the unused exclusion according to the rules set forth by the new regulations.

Given the amount of years a surviving spouse may live beyond the death of a spouse, the IRS maintains the right to examine all returns where portability is elected regardless of the statute of limitation.

The proposal in it's entirety can be read here. Contact your accountant or estate litigation Attorney for more information.

*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.