Quite often a prenuptial agreement is recommended when a couple is planning to get married, and if it is a second marriage for one or both. The agreement defines the interest each has, or does not have, in the property of the other. Prenuptial agreements are also recommended when one of the spouses is wealthier than the other. Prenuptial agreements can deal with numerous issues, and a new one is the issue of “portability”, the ability of a surviving spouse to use any estate or gift tax exemption not used at the first spouse’s death, by filing an estate tax return within nine months of the death.
The American Taxpayer Relief Act of 2012 (ATRA) made portability permanent, clarifying the ability of a married couple to share their individual estate tax exemptions. As of 2014, the estate and gift tax exemption amount is $5.34 million per person, or $10.68 million for a married couple. The Supreme Court’s 2013 decision in Windsor v. U.S. expanded that portability to same-sex married couples. An estate planning attorney should be involved in drafting the prenuptial agreement, because it is important to include instructions that survivor as the executor of the estate should elect portability, if is a beneficial step to take.