Estate and Inheritance taxes
You need to file Form 706 for the $5MM portability election:
IRC section 2010(c)(5)(A) Election required. A deceased spousal unused exclusion amount may not be taken into account by a surviving spouse under paragraph (2) unless the executor of the estate of the deceased spouse files an estate tax return on which such amount is computed and makes an election on such return that such amount may be so taken into account. Such election, once made, shall be irrevocable. No election may be made under this subparagraph if such return is filed after the time prescribed by law (including extensions) for filing such return.”
But late elections are allowed by writing “FILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” on the top of the late-filed Form 706.
Starting in 2017 or later, it is proposed that much of the estate tax will be eliminated, but what of the step-up in tax basis? Being discussed is when there is predeath appreciation in the assets of large estates, it will be taxed, subject to a $10-million-per-couple exemption. This could be done by limiting the step-up in basis for heirs who inherit capital assets from those estates.
Most states do not impose their own estate tax. N.J. is phasing out its law until it disappears at the end of 2017. Tenn. abolished its estate tax for deaths after 2015.
N.J. also has an inheritance tax.
D.C. and 14 states levy their own estate taxes: Conn., Del., Hawaii, Ill., Maine, Md., Mass., Minn., N.J., N.Y., Ore., R.I., Vt. and Wash.