“Portability” — its meaning. Generally, the term describes something that may be transported or  moved from one place to another. However, a new concept of the term was introduced with the federal  estate tax law passed by the U. S. Congress on December 17, 2010, and which became effective on  January 1, 2011. This law had a two-year life, expiring on December 31, 2012. It was followed by  current law which became effective on January 1, 2013. Portability was a spinoff of an estate  planning technique called the “bypass trust.” Since there is no federal estate tax on property  passing at the death of one spouse to the surviving spouse (an unlimited tax exemption), the estate  tax exemption available to the estate of the first spouse to die was mostly not used. In the  typical case, the first spouse left all or most of his or her estate to the surviving spouse. So  when the surviving spouse died, he or she owned all of the marital estate (or what remained of it),  but was entitled to only one exemption. Using the bypass trust, instead of the first spouse’s  estate passing directly to the surviving spouse, an amount of that estate, not exceeding in value  the available estate tax exemption, was placed in a trust for the benefit of the survivor. The  survivor had the use and benefit of the trust property and often was the trustee or manager, but  since it was not owned by the survivor, it was not included in the survivor’s estate, thus not  taxed at his or her death. With portability, the benefit of this type of planning is available  without the necessity of a trust. Property passing at death from one spouse to the survivor is not  taxable and, to the extent the first spouse’s tax exemption is not used, it is available for use by  the surviving spouse’s estate. The means that, in most cases, the surviving spouse’s estate is  entitled to two exemptions, the one in effect when the first spouse dies and the one available when  the second spouse dies. When the current law became effective, the exemption available to each  estate was $5,250,000.00 (annually indexed for inflation). The IRS has announced that the exemption  effective January 1, 2014 will be $5,340,000.00. With portability, the exemption for spouses will  be up to $10,680,000.00 in the surviving spouse’s estate. However, there is one exception: if the  surviving spouse remarries, her or his estate will lose the ported exemption and portability starts  again with the new spouse. Is the bypass trust no longer useful? Yes. With the bypass trust, the  property placed in trust will be protected from estate tax even if the surviving spouse remarries  and even if Congress decides to remove portability from the law.