Tax Professionals Back Portability Provisions in Obama Estate Tax Plan

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Language in President Obama's recent budget proposal making permanent a law allowing a spouse to transfer his or her estate tax exemption to a surviving spouse will simplify planning, but what taxpayers really need is underlying estate tax permanence, attorneys say in recent interviews. Obama's fiscal year 2012 budget recommended making portability permanent, requiring consistency in value for transfer and income tax purposes, modifying the rules on valuation discounts, requiring a minimum 10-year term for Grantor Retained Annuity Trusts, and limiting the duration of the generation-skipping transfer tax exemption. “For certain estates, portability can be very important. If they're interested in simplicity and they don't want to be bothered with a lot of trusts, it makes it possible for the surviving spouse to have two exemptions,” says Carlyn McCaffrey, chair of the Estate Planning practice group at Weil, Gotshal & Manges in New York. “That's a big simplification.”