About 3,300 estates will be in debt to the government in 2011, the lowest recorded number in 75 years (except in 2010). Ironically, even as the legislators bring down the number of taxable estates, the law seems to be working in the opposite direction, encouraging more estates to file for returns even without having tax debts. The resulting effect has been increased prices of estate planning that has in turn, kept planners as well as lawyers busy, hence, drowning the IRS in a sea of tax returns.The root cause of all this is none other than the portability provision of 2010 Tax Relief Unemployment Insurance Reauthorization and Job Creation Act that gives room for surviving spouses to claim personal exemptions on estate tax returns not used by their partners. For 2011, the exemption value is $5 million. If a partner dies this year, leaving an estate taxable worth of $3 million and no tax, the other partner may claim the vacant $2 million exemption when he/she dies. Hence, as long as the $5 million exemption still remains, the other partner’s estate could be free of taxes up to $7 million before it starts getting taxed.Retaining unused exemption is the simple definition of portability, as nice as it sounds, has its drawbacks. A surviving partner must file in an estate tax return that requests for portability in due time, it doesn’t matter if the estate owes tax or not. Else, the unused exemption is lost.Filing for portability is easy for spouses with large estates worth about $10 million combined tax threshold. Keeping unused exemption would prevent one from paying tax in the future if the estate becomes larger than that. Small estates could also benefit from portability. By 2013, estate tax is going to take the form of its pre-2001 arrangement with a $1 million exemption and a 55% top tax rate.The president and Congress however, don’t seem to be in full support of this but they may accept a below $5 million rate. The president has been clamouring to go back to the 2009’s $3.5 million exemption and a 45% tax rate. Portability could save surviving spouses hundreds of thousands of dollars.Note that Congress could also vote to remove exemptions in the future. Estates may then be forced to challenge that right in the future; win or lose, they’d have to try. Without keeping portability open, they’d have no case. Tax lawyers have spent a lot of energy encouraging their clients to file in tax returns, even when the law doesn’t demand so. Deadline for filing tax returns is nine months yet so many people always miss it.The importance of portability cannot be clearly stated. What is definite is that the IRS will have a lot more work to do processing returns and lawyers are just starring at a pool of job opportunities.