Latest news with #survivingSpouse
Daily Mail
15-07-2025
- Business
- Daily Mail
The Little-known cash Isa perk that lets you EXCEED your allowance: SYLVIA MORRIS
There is a useful benefit of tax-free cash Isas that is not well known and is often hard to find on providers' websites. It goes by the name of the additional permitted subscription, or APS for short. Not all providers offer them – including a major building society and many top payers on easy-access accounts. The APS gives you a one-off extra Isa allowance following the death of your husband, wife or civil partner. As the surviving spouse or civil partner, you are entitled to an extra Isa allowance equal to the amount they held in cash Isas with any number of providers. You can then carry on earning tax-free interest on the money. You don't inherit the Isa, but can use the money to open one in your own name. Crucially, it does not count towards this year's £20,000 allowance but comes on top. Broadly, you have three years from the date of death to use it. Check your provider: The additional permitted subscription benefit gives you a one-off extra Isa allowance following the death of your husband, wife or civil partner But if administering the estate takes longer than this, you have up to an additional 180 days after it is complete. You need to ask each of your late partner's Isa providers for a certificate that says you are entitled to this allowance. Ask your chosen provider to organise the transfer directly into an Isa in your name. Under the Isa rules, you can open your new Isa with the existing provider or move it to a new one. But if you want to use the same provider, they can choose whether they will accept the APS – and many don't. Providers that often appear among the best buys that don't accept them include Marcus, Shawbrook Bank, Paragon, Charter Savings Bank, Kent Reliance, Leeds BS, Close Brothers, Cynergy, Ford Money, Hodge Bank, Secure Trust, Vida Savings, United Trust Bank and app-based accounts Tembo, Chip, Moneybox and Plum. Paragon and Plum tell me that they hope to do so soon. The big banks that do include Barclays, Halifax, HSBC (but only if you have a current account with it), Lloyds, NatWest, Santander and Virgin Money. But their easy-access rates are generally below 1.5 per cent. National Savings & Investments accepts the additional allowance paid into its Direct Isa, paying 3.5 per cent. With cash Isas under threat from Rachel Reeves, it is crucial that you make the most of them now.
Forbes
19-05-2025
- Business
- Forbes
Portability: Should You File An Estate Tax Return?
Introduction When the first of two spouses dies the survivor can safeguard the estate tax exemption that the deceased spouse's estate did not use. The unused exemption is called the Deceased Spouse Unused Exemption or 'DSUE.' The concept of passing on that exemption is called 'portability.' The whole point of this is to 'simplify' the estate tax system. 'Simplify' is in quotes since anyone who has grappled with any aspect of our tax system knows that it is rare at best that anything in the tax Code is ever simple. To understand how portability simplified the system you need to understand what happened before portability existed. Before portability if say the husband died and wanted to protect his estate tax exemption he would bequeath assets to a trust for his wife (and often for his wife and all descendants). That would use or safeguard his exemption, permit the surviving spouse to benefit (which is often the personal goal), and avoid the assets being included in the surviving spouse's estate. One problem with that was that it required hiring an attorney with the sophistication to draft a will (or revocable trust) that included this type of trust, dividing assets between spouses, then on death that trust had to be funded (a step that was often overlooked), and then the trust had to be administered and an annual income tax return for the trust filed. That was complicated, costly and a step that was often missed. So, Congress enacted portability so that could all be avoided. Yet portability, despite all the good intent, requires filing an estate tax return and involves a decision process and awareness that few lay people are aware of, and which many either don't understand or fail to appreciate the benefits of. You secure your late spouse's exemption you must make an election on a timely-filed estate tax return. That means the cost of filing an estate tax return. Further, if you do file for the DSUE the time period during which the IRS can audit (called the 'statute of limitations') remains open for the decedent spouse's estate tax return until the statute of limitations has run on your (i.e., the surviving spouse's) estate tax return. That could be a long time. Consider how complex and costly it can be to file an estate tax return the law permits your personal representative to not report the value of certain property that qualifies for the marital or charitable deduction (since those would not be subject to estate tax in any event). Also, to use this special rule the executor must exercise due diligence to estimate the fair market value of the assets included in the deceased spouse's gross estate and report the values under penalty of perjury to the IRS. In reality, many CPAs have found these rules sufficiently nettlesome, that they just try to get actual values. Also, you need values to support the basis adjustment of the deceased spouse's income tax basis on the property to the fair market value at death. Since that can have important income tax implications, and because the potential impact of different valuations on beneficiaries, many CPAs or other tax preparers (e.g., the attorney handling the estate) opt to get real numbers. So, the law was really complicated before portability. Congress tried to simplify the rules especially to help smaller estates, but created a host of new complications and traps. What's the bottom line? There is incredible uncertainty over estate taxes. For example, will the next election bring a different administration that might reduce the exemption to $1 million? Who knows. Here are a few thoughts: So, likely many more surviving spouses should file an estate tax return to secure their deceased spouse's unused exemption. Many don't simply to save money. Cost is clearly a significant consideration but it is not the only one. Why Bother Filing? A common belief that many taxpayers exhibit is 'Why file and incur the cost since the total estate is so much less than one exemption?' The answer to that question can be analyzed with a few more questions like: Mom Can Just Gift Assets to Us There is no shortage of ideas how to avoid the expense of filing an estate tax return to secure the exemption of your spouse that passed. Another one of these 'ideas' goes like this. 'Dad died. So, mom can just gift assets to us so she wont have a taxable estate.' First, read the 'what-if' questions above. These same uncertainties may apply to your family as well. It is not clear what the idea behind the surviving spouse making gifts is, but here are a few thoughts: A Better Option Have a CPA file an estate tax return for the first spouse to die. If the assets come outright to the surviving spouse he or she can gift assets into a trust that can protect the assets, protect heirs, and assure the surviving spouse access. With the potential cost of several of the uncertain future developments it just doesn't make a lot of sense to save a few bucks now for risk and problems later. You might turn out to be right and perhaps the filing could prove unnecessary. But if you are proven wrong it could be too late and dramatically more costly then the saving in professional fees.
