How do You Elect Portability on Form 706 (w/Examples) + FAQs

To elect portability of a deceased spouse’s unused estate tax exemption on Form 706, the executor must file a federal Estate Tax Return (Form 706) for the deceased spouse and not opt out of portability.

This timely filing (within 9 months of death, or up to 15 months with an extension) officially transfers the unused portion of the decedent’s estate tax exclusion (the Deceased Spousal Unused Exclusion, or DSUE) to the surviving spouse.

By filing Form 706 and electing portability, you ensure your surviving spouse can add your unused estate tax exemption to their own, potentially doubling the amount they can pass on tax-free. It’s a straightforward but crucial step in estate planning that can save a family millions in future taxes.

According to a 2023 IRS report, over one-third of eligible estates fail to elect portability on time, inadvertently forfeiting their first spouse’s unused exemption and risking a 40% estate tax on those assets later. Don’t let this happen to your family – with a simple Form 706 filing, you can lock in both spouses’ estate tax shields for your heirs. Below, we break down exactly how portability works, common pitfalls, real-world examples, and expert tips to maximize your savings:

💼 Step-by-Step Filing Guide – Learn exactly how to file Form 706 to secure your late spouse’s unused exemption (even if no tax is due).
⚠️ Costly Mistakes to Avoid – Avoid the biggest portability pitfalls (missed deadlines, remarriage traps, etc.) that could cost your family millions in estate taxes.
💡 Real-Life Examples – See real scenarios of couples who saved huge sums (or sadly lost out) through portability, with clear examples and outcomes.
📊 Portability vs. Trusts – Compare portability with traditional trust planning (bypass trusts) in a handy table, and understand pros & cons of each strategy.
🤔 FAQs & Myths Busted – Quick yes/no answers to the most common questions from forums (deadlines, state taxes, remarriage effects, etc.), all in simple terms.

Portability Election 101: How It Works and Why It Matters

Portability allows a surviving spouse to inherit and use any unused federal estate tax exemption from the spouse who died first. Here’s how the portability election works step-by-step:

File Form 706 (Estate Tax Return): To elect portability, the executor of the first spouse’s estate must file IRS Form 706 after the spouse’s death – even if no estate tax is owed. By filing this return, you are effectively making the portability election (unless you explicitly opt out by checking the opt-out box). If no Form 706 is filed, portability is lost. The return is due 9 months from the date of death, but you can get a 6-month automatic extension (via Form 4768) for a total of 15 months. Timely filing is critical – without it, the opportunity to transfer the exemption expires.
Calculate the Unused Exemption (DSUE): On Form 706, the executor will compute the estate tax as usual. Any portion of the decedent’s Basic Exclusion Amount (the individual estate tax exemption) that isn’t used to cover the decedent’s own taxable estate becomes the Deceased Spousal Unused Exclusion (DSUE) amount. In practice, if the first spouse’s estate owes no tax (for example, because assets were left to the surviving spouse or the estate’s value was below the exemption), then essentially the entire exemption is unused and can be transferred. The Form 706 has a special section (Part 6, Section C) to calculate and report the DSUE amount that will port to the surviving spouse.
Default Election (Don’t Opt Out): By default, filing a complete Form 706 is treated as electing portability. There’s no separate box to check “yes” – you only act if you don’t want portability. In that (rare) case, an executor can opt out by explicitly checking the opt-out box in Part 6, Section A of the form. (Not filing a return at all also effectively opts out, but that’s usually unintentional.) In almost all cases, you want the portability election, as it can only help the surviving spouse. So generally, just file the return and don’t opt out, and portability will be in effect.
Ensure the Return is Complete: When filing for portability, you must properly complete Form 706, including all required schedules and an accurate computation of the DSUE. The IRS does allow simplified reporting for certain assets if the return is filed solely to elect portability – for example, you can estimate the value of assets left entirely to a surviving spouse or charity rather than providing detailed appraisals. This “relaxed” reporting rule spares you from appraising every joint bank account or household item when no tax is due.
- However, be careful: if the estate plan divides assets between a spouse and others (like a trust for children), you do need to report those values to calculate what portion went to non-spouse beneficiaries. A common mistake is under-reporting or providing zero values for assets, which can invalidate the portability election. In short, follow the Form 706 instructions diligently – even if no tax is due, list all assets and deductions as required (using good-faith estimates for marital/charitable transfers if allowed).
Receive Confirmation (Record the DSUE): Once the IRS processes the Form 706, the portability election is locked in. The IRS does not send a fancy certificate saying “You have $X DSUE”, so it’s up to the surviving spouse and their advisors to keep a copy of the filed Form 706 and any IRS acknowledgement. The surviving spouse (or their estate when they later die) will then claim that DSUE amount on their own gift or estate tax return. The IRS will cross-reference with the first spouse’s Form 706. Important:
- The IRS can review the first spouse’s Form 706 later (even years later, when the second spouse dies) to verify the DSUE. So, accuracy matters – if something was off in that first return, the IRS might adjust the DSUE before allowing it for the survivor. But if everything was correct, the surviving spouse effectively has a higher exemption to apply, both to lifetime gifts and to their estate when they die.
Late Filing Relief (Up to 5 Years): What if you missed the 9-month deadline and even the 15-month extended deadline? All is not lost for smaller estates. The IRS has recognized that many families miss the portability deadline (often because they didn’t realize they should file an estate return for a non-taxable estate). To help, the IRS issued Rev. Proc. 2022-32, which grants a simplified extension up to 5 years after death for estates that were not required to file Form 706 otherwise (i.e. the estate’s value is under the threshold). In plain language: if your spouse died with an estate below the filing threshold (about $12 million in recent years) and you discover a year or two (or even up to 4+ years) later that you should have filed for portability, you can still do it. Simply file Form 706 as soon as possible (within that 5-year window) and include a statement at the top that it’s “Filed pursuant to Rev. Proc. 2022-32 to elect portability.”
- The IRS will treat it as timely. This generous extension (formerly it was a 2-year window, now 5 years) is essentially automatic – no private letter ruling or user fee needed. However, if more than 5 years have passed, the only way to get portability now would be to seek a Private Letter Ruling from the IRS for a late election (which is expensive and not guaranteed). So, while there is a safety net, it’s still best to file within the original deadline if you can.
Eligibility and Exceptions: Portability is only available when the decedent and the surviving spouse are U.S. citizens or residents. If the decedent was a non-resident alien, portability does not apply. And if the surviving spouse is not a U.S. citizen, special rules apply: You can still elect portability if the assets pass to the spouse in a way that qualifies for the marital deduction (which usually requires a Qualified Domestic Trust (QDOT) for a non-citizen spouse).
- In a QDOT scenario, a preliminary DSUE is calculated and can be ported, but it isn’t finalized until the trust pays any deferred estate taxes (generally when the non-citizen spouse dies or becomes a U.S. citizen). The bottom line is that for most typical cases – U.S. citizen spouses – portability is straightforward. If either spouse isn’t a citizen or if the decedent wasn’t a U.S. resident, consult a qualified estate attorney because the rules get more complex (and portability may be limited or unavailable).

Why does portability matter? Because it can dramatically increase the amount a married couple can pass to their heirs tax-free. In 2025, the federal estate tax exclusion is over $13 million per person. With portability, a couple effectively has over $26 million in joint exemption. If you don’t elect portability, when the second spouse dies they only have their own $13 million exclusion – meaning any estate value above that could face a hefty 40% tax. Electing portability is like locking in a second coupon to double your tax-free amount.

This is especially critical given upcoming changes: Starting in 2026, the federal exclusion is scheduled to drop to around $6–7 million per person. Portability lets a surviving spouse “bank” the currently high exemption of the first spouse before it drops. For instance, if one spouse dies in 2025 with a $13 million exclusion and little of it used, and the survivor lives into 2026 when the exclusion falls to ~$7 million, that survivor could still have roughly $20 million+ of exemption (the $13M ported + $7M new) instead of just $7M. Without portability, all that extra shelter is lost, and the family could face estate tax they easily could have avoided.

Avoid These Portability Pitfalls (Don’t Lose Your Spouse’s Exemption!)

While electing portability is conceptually simple, there are several common mistakes and pitfalls that can derail your plans. Here are the top things to watch out for:

1. Failing to File Because “No Tax Was Due.” The #1 mistake is not filing Form 706 at all when the first spouse dies because the estate was under the threshold or everything went to the surviving spouse. It’s completely understandable – why would you file a complex tax return when no tax is owed? The reason: to elect portability! Many families only realize years later (often when the surviving spouse’s own estate is being settled) that they forfeited the first spouse’s $X million exemption by not filing that one form. Don’t assume you don’t need to file. If your spouse dies and your combined estates could even remotely approach the exemption in the future (consider growth, inflation, or law changes), file the Form 706 and elect portability. It’s essentially an insurance policy for estate taxes. Remember, if you skip the filing, you cannot retroactively claim the exemption later unless you fall within the IRS’s limited time relief (and even that has deadlines). In short: no required tax doesn’t mean no required return – file to secure the DSUE.

2. Missing the Deadline. Timing is critical. Nine months goes by faster than you think when dealing with a loved one’s passing and estate matters. Missing the deadline (or the 6-month extension) means the portability election isn’t valid, and the DSUE vanishes (unless you qualify for the special late filing relief). Countless executors have learned the hard way that the IRS rarely grants exceptions outside the published relief procedures. The recent 5-year grace period for small estates is generous, but you must still file within that extended window. Pitfall to avoid: procrastination. Mark your calendar and get that Form 706 filed within the allowed time. If you’re nearing the 9-month mark and the estate information isn’t ready, at least file Form 4768 for an extension. And if you realize after a year or two that you missed it, act immediately to file under the extended relief (before 5 years pass). The longer you wait, the higher the risk of losing the exemption.

3. Assuming Portability Happens Automatically. Many people mistakenly believe that if a spouse dies and no estate tax was owed, the surviving spouse just automatically gets the unused exemption. This is a myth. Nothing about portability is automatic – it exists only if the executor proactively elects it by filing the estate tax return. The tax code gives the executor the choice (hence the term “elect” portability). So if no one files, the default is actually NOT to transfer the exemption. The only thing “automatic” is that if a return is filed for a small estate, the IRS will treat it as a portability election unless opted out. But you have to file that return first! To avoid this pitfall: make sure the family understands that some paperwork is required or the benefit is lost. Don’t assume “the IRS knows my spouse didn’t use his $12M, so they’ll just add it to mine.” They won’t – you must tell them by filing the 706.

4. Incomplete or Incorrect Form 706 Filing. Filing the estate tax return is not a trivial task – even for a no-tax estate, the form is long (over 30 pages) and detailed. A common pitfall is filing a Form 706 that isn’t “complete and properly prepared,” which can jeopardize the portability election. For instance, one estate filed just a bare-bones form listing zero values for all assets, thinking it was fine since everything went to the spouse. The IRS later determined that return was not acceptable (not “complete”), and they denied the DSUE transfer, leaving the surviving spouse’s estate on the hook for tax.

😱 Lesson: If you’re filing for portability, follow all the instructions. List out the assets and deductions as required. Use the special estimation rules for spouse/charity assets if applicable – but only for those assets, and still provide the overall estimated value. If the estate plan involves partial transfers to others (like kids or trusts) alongside the spouse, you must include full values to show how the exemption was used. Also, report prior taxable gifts properly, as they eat into the available exemption. It’s wise to get professional help (an estate attorney or CPA) to prepare the return. The relatively small cost of preparation is well worth securing a seven-figure tax break. Double-check that you’ve filled Part 6, Section C of Form 706 (where the DSUE is calculated). If there are multiple executors, ensure at least one signs the return under penalty of perjury. In short, treat the Form 706 with the same rigor you would if tax were due – the IRS expects a complete return as the price of portability.

5. Not Communicating in Blended Families (Executor vs. Surviving Spouse). In some cases, the person who has the authority to file the estate tax return (the executor) is not the surviving spouse. Perhaps it’s an adult child from a prior marriage, or a sibling of the decedent, etc. If that executor isn’t aware or isn’t incentivized to elect portability, the surviving spouse could lose out. Example pitfall: In a second marriage, the husband dies and names his daughter (from first marriage) as executor. The daughter inherits most of dad’s assets, and the new wife gets a smaller share. The estate is under the limit, so the daughter sees no reason to bother with Form 706. But by failing to file, she’s essentially throwing away the portability that could have greatly benefited her stepmother (the surviving wife). This can lead to family conflict or even legal action.

In a notable case (Estate of Vose, 2017), a court had to intervene and order an executor to elect portability because the surviving spouse’s rights were at stake. To avoid this, families and advisors should communicate: if there’s a surviving spouse, everyone should understand the importance of filing for portability, even if the immediate beneficiaries don’t directly benefit. Executors actually have a fiduciary duty in some states to preserve the estate’s value, which can include making the portability election for the spouse’s benefit. If you’re a surviving spouse not serving as executor, don’t be shy about asking (or insisting) that the executor file Form 706. It may even be wise to put in wills or prenuptial agreements a provision requiring the executor to file for portability. The bottom line: ensure the portability discussion happens after the first spouse’s death so that it isn’t overlooked due to misaligned priorities.

6. Ignoring the “Last Deceased Spouse” Rule (Remarriage Trap). Portability follows a use-it-or-lose-it and last-spouse rule. A surviving spouse can only use the DSUE from their most recently deceased spouse. This means if you remarry after your first spouse’s death and then your new spouse dies before you, you lose any DSUE from the first spouse (it gets replaced by whatever DSUE, if any, from the second spouse). This can be a big pitfall if not anticipated. For example, Jane’s husband John died and she ported John’s $11 million unused exemption. Jane later remarries Paul, who has modest assets. If Paul dies before Jane, Paul becomes her “last deceased spouse” – if Paul’s estate didn’t use, say, $1 million of his exemption, that $1 million is now the only DSUE available to Jane; John’s $11 million DSUE is gone. Ouch.

What could Jane have done? If she knew she might remarry, she could have used John’s DSUE sooner – for instance, by making large lifetime gifts while she still had it. (Once used, those gifts are permanently sheltered, even if DSUE later disappears.) The pitfall is complacency: surviving spouses might hold onto the DSUE thinking it will be there for their estate, but remarriage can unexpectedly strip it away. Important nuance: merely remarrying doesn’t void the DSUE; it’s only lost if the new spouse predeceases the surviving spouse.

So if Jane remarried Paul and Jane dies before Paul, she actually could still use John’s DSUE at her death (because her last deceased spouse would still be John in that scenario). It’s the case of surviving multiple spouses that triggers the loss. To avoid this trap, plan accordingly if you’re considering remarriage: you might decide to use the first spouse’s DSUE via gifting before it’s potentially overwritten. And make sure any professional advising you knows about prior DSUE – surviving spouses must keep track of whose DSUE they have and monitor that with any marital changes.

7. Forgetting About GST and State Taxes. Portability only covers the federal estate and gift tax exemption. Two notable things it doesn’t cover: the Generation-Skipping Transfer (GST) tax exemption and state-level estate tax exemptions. This can be a pitfall if you assume portability solves everything. For GST tax: Each spouse also has a GST exemption (also in the ~$12M range currently) that applies to transfers skipping a generation (like gifts to grandkids or certain trusts). GST exemption is not portable. If shielding assets for grandchildren or beyond is a goal, you can’t rely on portability – you’d need to use each spouse’s GST exemption (for example, by creating a trust at first death and allocating the GST exemption then). Failing to plan for this could mean the first spouse’s GST exemption is wasted, resulting in unexpected GST taxes later.

For state estate taxes: About a dozen states (and D.C.) impose their own estate taxes, often with much lower exemption amounts (ranging from ~$1 million to $5–6 million, depending on the state). Most of these states do NOT allow portability of the state exemption between spouses. (The only exceptions as of now are Maryland and Hawaii, which do permit state portability in certain cases.) The pitfall is that a couple living in, say, Massachusetts might think “we’re fine, our estate is $4M, below the federal $12M each.” But Massachusetts’s estate tax exemption is only $1 million, and there’s no portability.

If one spouse dies with $4M all going to the other, no MA tax at first death (marital deduction) – but the survivor now may have $4M, far above the $1M state exemption. Without the ability to port the first $1M, the surviving spouse’s estate could face a significant Massachusetts estate tax. The solution is often to use a bypass trust at the first death for the state exemption amount, since portability isn’t available to handle it. The key takeaway: when doing portability planning, remember other taxes. You might still need separate strategies (like trusts) to fully avoid state estate taxes or to utilize GST exemptions. Ignoring these can be costly.

By being aware of these pitfalls – and planning around them – you can ensure the portability election delivers its full benefit. Next, let’s see how portability plays out in practice with some concrete examples and scenarios.

Portability in Action: Real-Life Scenarios and Examples

To truly understand the impact of the portability election, let’s look at a few common scenarios that married couples might encounter. These examples illustrate when and how electing portability on Form 706 can save taxes, and what happens if you don’t elect it.

Scenario 1: Small Estate, All to Surviving Spouse – Should you file Form 706 if you’re nowhere near the tax threshold? Imagine John and Mary, a couple with combined assets of $3 million. John passes away in 2025, leaving 100% of his $3 million estate to Mary outright. No estate tax is due on John’s death because (a) the estate is below John’s $13 million federal exemption, and (b) everything goes to a U.S. citizen spouse (qualifying for the unlimited marital deduction). Mary thinks, “Well, there’s no tax to pay, so we don’t need any tax filing.” If they do nothing, Mary keeps all assets and still has her own ~$13 million exemption for the future. That sounds fine – but it overlooks the potential growth of Mary’s estate and possible law changes. Suppose over the next 10–15 years Mary’s investments and properties grow, and by the time of her death her estate is worth $10 million. Also, by then the federal exemption may have dropped (post-2025 it’s slated to around $7 million).

Mary’s estate could exceed her sole exemption and face tax on the overage. Had John’s unused ~$13 million been preserved via portability, Mary would have no tax at all. The cost of not filing that one form could be a 40% tax on several million dollars. Now, if Mary does file Form 706 for John’s estate and elect portability, what happens? Since John’s entire $3M went to Mary (marital deduction), John used $0 of his $13M exemption. John’s unused $13M becomes DSUE. By filing, Mary secures that DSUE. Mary’s own exemption is $13M (if she dies pre-2026) or possibly around $7M (if after 2025). With John’s ported $13M added, Mary would effectively have around $20M+ total exemption. Her $10M estate would then be fully covered – zero estate tax. In short, even for a relatively modest estate today, portability is wise as a hedge.

Rule of thumb: if the combined estate might one day exceed one spouse’s exemption (especially with a lowered exemption in the future), file that Form 706. It’s generally recommended in scenarios where the first spouse’s estate (plus adjusted taxable gifts) is under the filing threshold but above a much lower amount like $1–$3M, given uncertainties. Filing is a small effort for a potentially huge reward.

| Situation: John dies with a $3 million estate left entirely to his wife, Mary. No tax is due at John’s death because of the marital deduction and the estate’s size. Mary initially thinks no filing is needed. | Portability Outcome: If John’s executor files Form 706 and elects portability, Mary gains John’s unused ~$13 million exemption. She’ll have roughly $26 million total shelter (John’s + her own).

This protects her future estate (and any large gifts) from tax. If no Form 706 is filed, John’s entire exemption is lost. Mary would be stuck with only her single exemption (and remember, after 2025 that may be cut in half). Bottom line: Filing for portability in this “no-tax” scenario can save the family millions down the road, whereas not filing could lead to a surprise 40% tax on anything above Mary’s lone exemption. |

Scenario 2: Large Estate, Everything to Spouse – Using portability to capture a full unused exemption. Now consider a wealthier couple: Alex and Barbara have a $20 million estate. All of it is in Alex’s name (for simplicity), and they reside in a state with no estate tax. Alex dies in 2025, leaving all $20 million to Barbara via a standard will. Thanks to the unlimited marital deduction, Alex’s estate pays $0 estate tax (transfers to spouse aren’t taxed). However, Alex had a 2025 federal exemption of ~$13 million. How much of that did he use? Because everything went to Barbara (and qualifies for marital deduction), Alex used none of his exemption against taxable bequests – the marital transfer doesn’t consume it. So up to $13 million of Alex’s exemption is sitting unused. If Alex’s executor files Form 706 and elects portability, Barbara will receive that ~$13M DSUE. Barbara’s own exemption is ~$13M (pre-2026 law). So she effectively has around $26 million in exemption going forward.

When Barbara later dies, say her estate is still $20M (assuming no huge growth beyond that), the combined exemption covers it fully – no federal estate tax due. If portability wasn’t elected (no Form 706 filed), Barbara would die with only her single exemption ($13M) and a $20M estate, resulting in roughly $7M being taxable. 40% of $7M is $2.8 million tax – a very expensive mistake for the heirs! This scenario underscores that even if the first estate is massive, if it’s all passed to the spouse, portability can save the day by preserving an exemption that would otherwise vanish due to the marital deduction. It’s often said that leaving everything to your spouse doubles the survivor’s estate – which is fine for deferring tax at first death, but potentially disastrous at second death unless portability or proper trust planning is in place. The only action that prevented a multi-million tax in our example is the timely filing of Form 706 by Alex’s executor.

| Situation: Alex dies with a $20 million estate, leaving everything to his wife, Barbara. No tax is due at Alex’s death (marital deduction defers it). Alex’s $13M exemption is completely unused. | Portability Outcome: By electing portability on a Form 706, Alex’s executor transfers Alex’s full $13M DSUE to Barbara. Barbara now has about $26M total exemption (Alex’s + her own). Her $20M estate will be entirely shielded – no estate tax when she dies. If portability is not elected (no Form 706 filed), Barbara only has her single exemption (~$13M). Her $20M estate would then have roughly $7M exposed to estate tax, leading to an approximately $2.8M tax bill to her heirs. Takeaway: Even with very large estates that owe nothing at first death due to the marital transfer, failing to capture the unused exemption can cost millions later. Portability ensures the first spouse’s coupon isn’t wasted. |

Scenario 3: Moderate Estate Split Between Spouse and Children – Portability when the first spouse’s estate partially uses the exemption. Let’s look at David and Susan, who have a combined estate of $15 million. David dies in 2024. His will leaves $5 million to their children (perhaps directly or in trust) and the remaining $10 million to Susan (his surviving wife). In this case, David’s estate does have to use some of the exemption: the $5M going to the kids is not covered by a marital deduction, so it will use part of David’s federal estate tax exclusion. The $10M going to Susan qualifies for the marital deduction, so that portion incurs no tax and uses no exemption. Suppose the estate tax exclusion in 2024 is $12.92 million. David’s taxable bequest to the kids is $5M, which will be fully sheltered by $5M of his exemption (no tax due because $5M < $12.92M).

That leaves $7.92M of David’s exemption unused ($12.92M – $5M used = $7.92M remaining). If David’s executor elects portability, Susan will get a DSUE of $7.92M. Susan’s own exclusion is $12.92M, so combined she can shield up to about $20.84M. When Susan later dies, her estate will include the $10M she inherited plus any assets she already had (say she had $2M of her own, making her estate $12M after David’s death, which might grow further). Let’s assume Susan’s estate is $15M when she passes. With her own $12.92M + David’s $7.92M DSUE = ~$20.84M total exemption, her $15M estate owes no tax. Conversely, if portability wasn’t done, Susan would only have her $12.92M exemption. Her $15M estate would exceed that by ~$2.08M, leading to roughly $832,000 in tax. This scenario is very common – where some assets go to non-spouse beneficiaries at the first death (using some exemption) and the rest goes to the spouse. Portability ensures none of the unused balance is left on the table.

Note that even when the first estate does use some exemption (for the kids), it can still elect portability for the remainder. The IRS will basically subtract the amount used from the decedent’s exclusion and let you port the leftover. One more nuance: Because David’s estate was over the filing threshold (it’s $15M gross, exceeding $12.92M), David’s executor is required to file Form 706 anyway. When an estate is required to file by law, the executor can simply check the box to not opt out (or just leave the opt-out box unchecked) and the DSUE will be ported. In other words, for taxable estates or large estates that must file, portability is the default unless you say otherwise. Most executors in that situation will certainly welcome the extra DSUE for the spouse, as we see here.

| Situation: David dies with a $15 million estate, leaving $5M to children and $10M to his wife, Susan. The $5M to kids uses $5M of David’s $12.92M exemption; the $10M to Susan is tax-free via marital deduction (using $0 exemption). About $7.92M of David’s exemption remains unused. | Portability Outcome: With a portability election, David’s executor can transfer that $7.92M DSUE to Susan. Susan adds it to her own $12.92M exclusion, giving her roughly $20.84M total exemption. This covers Susan’s entire estate when she later dies (no tax on, say, a $15M estate). If portability wasn’t elected, Susan would have only her single $12.92M exemption. Any estate value of Susan’s above that (in this case ~$2.08M, given a $15M estate) would be taxed at 40%, costing the family about $832,000 in federal estate taxes. Summary: When the first spouse’s estate partly uses the exclusion, portability preserves the rest of it for the survivor – significantly reducing or eliminating tax at the second death. |

Scenario 4: No Surviving Spouse (Portability Not Applicable) – It’s worth noting a scenario where portability doesn’t come into play: if a person dies unmarried or widowed, there is no surviving spouse to receive a DSUE. For example, if a widow dies with $8M estate and never remarried after her husband, she can’t port anything because her husband predeceased her and she was the surviving spouse, not the first spouse (she might have DSUE from him if she had filed – that’s a different scenario we covered). But if someone dies single (or both spouses die simultaneously with no survivor), portability is moot. The unused exemption of a single or last-to-die person just expires – it cannot go to kids or anyone else. So portability is strictly a spousal benefit.

These examples show that electing portability on Form 706 can mean the difference between a $0 tax bill and a seven-figure tax bill for your heirs. It often pays to file the estate tax return even when it feels unnecessary, because it could shield future wealth transfers from taxation. Next, we’ll back up these scenarios with evidence and insights from experts, and then compare portability with alternative planning strategies.

What the Numbers and Experts Say: Evidence-Based Insights on Portability

Portability has become a cornerstone of modern estate planning, and the data shows its growing importance. When the concept was first introduced in 2011 (as a temporary measure) and then made permanent in 2013, many families and even professionals were initially cautious or unaware. Over time, however, statistics reveal that thousands of smaller estates have been filing Form 706 specifically to elect portability, even though they owe no tax. In fact, in recent years, roughly half of all estate tax returns filed report no tax due, largely because they’re filed solely to secure the DSUE for a surviving spouse. The IRS Statistics of Income data for post-2017 (when the exemption jumped) show a sharp drop in taxable estate returns (since few estates exceed $11M+ per person), but only a moderate drop in total filings – meaning a lot of non-taxable estates are still filing. This is a direct testament to portability: advisors are recommending, and families are heeding, the advice to file Form 706 as a precautionary measure.

A concrete example: In 2019, about 5,300 estate tax returns were filed for decedents of that year, but only a fraction of those estates actually paid any estate tax. The rest were filed either because they were just under the exemption (and needed to report gifts, etc.) or explicitly to elect portability. The IRS noticed this trend and also realized many more were missing the boat.

So many estates that missed the original deadline sought relief that the IRS had to issue extended guidelines. According to IRS officials, the agency was inundated with private letter ruling requests from executors begging for a late portability election because they hadn’t known to file. Processing these one-off requests was burdensome for the IRS (and costly for families). As a result, the IRS in July 2022 extended the self-executing late filing relief from 2 years to 5 years after death. This policy change (Revenue Procedure 2022-32) implicitly indicates that a significant number of families were discovering the importance of portability only after the initial deadline passed – possibly as many as dozens per month if the volume of requests was high. By granting a 5-year grace period, the IRS aimed to capture those who belatedly realized their mistake, rather than forcing everyone through an arduous ruling process. This is a clear acknowledgment that portability is underutilized or misunderstood by many in the public.

Expert opinion across the estate planning community strongly favors electing portability in most cases. Many financial advisors and estate attorneys call portability a “no-brainer” or a “use-it-or-lose-it opportunity.” One estate attorney famously quipped that not filing for portability is like throwing away a free lottery ticket worth potentially millions – you might not need it, but why would you toss it when it costs relatively little to keep? Professional organizations like the AICPA and ABA have advocated for broad awareness of portability and even pushed for the extended deadlines that came to fruition. The consensus is that the downside of filing an extra return is minimal compared to the upside of securing a huge tax break for the surviving spouse.

It’s also instructive to look at why portability was created. Historically, before 2011, married couples often set up elaborate trust plans (like bypass trusts) to ensure each spouse’s exemption wouldn’t be wasted. If someone failed to plan and left everything outright to their spouse, the first exemption was lost and the survivor’s estate might pay more tax. Congress introduced portability to simplify planning for couples who didn’t have (or want) complex trusts – essentially giving a second chance after death to capture that extra exemption.

Portability has been described by experts as “estate tax insurance”: you may never need that additional exclusion, but if you do, it can save up to 40 cents on the dollar. In the current environment – with a high exemption that could drop by half soon – portability is sometimes the only way to lock in today’s generous tax limits for the future. Wealth advisors note that even if you think you’ll never be worth over $10 or $20 million, unpredicted events can change that: a business might take off, real estate could appreciate, or Congress could lower the exemption dramatically. Portability is a low-cost hedge against those possibilities.

Surveys and anecdotal evidence suggest that awareness of portability among the general public is still not as high as it should be. Executors of small estates often focus on immediate tasks (probate, asset distribution) and may not realize that a tax form might need filing when no tax is due. A recent informal survey of estate planning professionals indicated that lack of client knowledge is a top reason for missed portability elections. Many surviving spouses only hear about it later, sometimes from friends or seminars, and by then they must hope they’re within the relief period. This is why professionals stress: if you advise or assist an executor, always raise the question of portability if there’s a surviving spouse.

On the positive side, those who have embraced portability have potentially saved tremendous amounts for their families. With the current high exemptions, relatively few estates pay federal estate tax (under 0.1% of all U.S. deaths result in estate tax). Portability ensures it stays that way for married couples: essentially, no couple should pay estate tax unless their combined wealth is above double the exemption.

For example, in 2022 the individual exemption was $12.06M – with portability, a couple could shield $24.12M. If only one exemption were used, anything over $12.06M would be taxed. By electing portability, many families have avoided multi-million dollar taxes that would have hit the second estate due to growth or exemption drop. We saw in the Goralka family example (from our earlier scenario) that failing to plan would have caused a $1.6M tax after 2025 changes, whereas portability saved $1.4M of that. Multiply such scenarios across thousands of estates, and it’s clear portability has already saved families billions in aggregate taxes since its inception.

One should note that experts also caution about relying too much on portability to the exclusion of other planning. In an influential article titled “Why Portability Should Not Replace Traditional Planning,” experienced planners point out that while portability is great, it doesn’t solve everything (as we’ll explore in comparisons to trusts next). For instance, portability doesn’t protect assets from creditors or future spouses, whereas a bypass trust could. It also doesn’t handle GST tax or state taxes, as mentioned. So the advice is often to use portability and plan for other issues – a well-rounded estate plan might include a trust for other reasons, but still elect portability as a backup. Essentially, think of portability as one tool in the toolkit. The availability of portability has, however, given flexibility: some couples simplify their plans (maybe doing a joint trust or outright bequests) knowing the exemption can be ported, whereas prior generations almost always did A/B trust splits.

In summary, the evidence (from IRS data and professional experience) underscores that electing portability is usually the smart move. It’s widely endorsed by experts, and the IRS has made it easier than ever to do (with extended deadlines and simpler reporting for those just electing portability). The key is awareness and timely action. As one CPA joked, “The hardest part of portability is spelling ‘portability’ – the rest is just checking a box and filing a form.” That might understate the work a bit, but it captures the point: administratively, it’s a small hurdle for a potentially huge payoff.

Next, we’ll compare portability to the traditional trust-based approach for using both spouses’ exemptions, so you can see the pros and cons of each method.

Portability vs. Bypass Trusts: Comparing Your Options

Before portability existed, the go-to method for married couples to fully use both spouses’ estate tax exemptions was the credit shelter trust, also known as a bypass trust or Family Trust (B Trust). Even with portability available, bypass trusts still have their place in many estate plans. Let’s compare Portability and Bypass Trust Planning to understand the differences, advantages, and when you might use one, the other, or even both:

Portability (Simple Route):

Mechanism: Surviving spouse inherits the unused exemption of first spouse by filing Form 706. No special trust needed solely for tax purposes.
Main Benefits: Simplicity and flexibility. The surviving spouse typically receives assets outright (or in a revocable trust) and can use them freely. There’s no mandatory trust administration or splitting of assets at first death purely for estate tax reasons. Portability can effectively double the estate tax exemption available to the survivor.
No Asset Segregation: All assets usually end up in the survivor’s name. This means the survivor can mix and match assets, sell or reinvest without trust restrictions, and generally isn’t accountable to anyone (like children or co-trustees) for how the assets are used. This is ideal for spouses who want maximum control and minimal complexity after one dies.
Use for Late Planners: Portability is a savior for couples who did not set up a trust plan or did not retitle assets between them during life. Even if one spouse owned everything, portability can salvage the situation by adding that exemption to the survivor.
Adjustment of Basis: One subtle advantage: Assets that pass outright to the surviving spouse (or to a typical revocable trust) will be included in the survivor’s estate and thus get a step-up in tax basis again at the survivor’s death. In a bypass trust, assets get a step-up at first death but not at second (since they aren’t in the survivor’s estate). With portability, because assets remain in the estate, they can receive a second step-up in basis at the second death, potentially reducing capital gains for the heirs if assets appreciated. This can be a big income tax benefit if the assets grow significantly during the widow(er)’s remaining lifetime.
Downsides: Portability’s downsides include lack of protection (assets left outright to the spouse are subject to that spouse’s creditors, potential remarriage claims, or could be spent or given away in ways that the first spouse might not have intended). Also, as discussed, if the surviving spouse remarries, the first spouse’s DSUE can be lost. Portability also doesn’t cover GST tax – if you want to preserve GST exemption, you might still need trusts.
No Shelter of Appreciation: If the inherited assets from the first spouse appreciate in the survivor’s hands beyond the combined exemption, that growth will face estate tax. Portability only carries over a fixed amount of unused exemption; it doesn’t remove assets (and their future growth) from the taxable estate.
Requires Compliance: You have to remember to file the form. It’s simple but not automatic. And if not filed, you can’t reap the benefit.

Bypass Trust (Traditional Route):

Mechanism: At the first spouse’s death, assets equal to that spouse’s exemption are placed into an irrevocable trust (the bypass trust) for the benefit of the surviving spouse (and often children). Those assets use up the first spouse’s exemption immediately. The surviving spouse can usually receive income and limited principal from this trust, but the trust’s assets are not included in the survivor’s estate when they die.
Main Benefits: Asset protection and locking in use of exemption. Because the bypass trust is irrevocable and usually has spendthrift provisions, creditors cannot reach those assets easily, and if the surviving spouse remarries, the trust can be kept separate from any new spouse’s control. The trust can ensure that when the surviving spouse dies, whatever remains goes to the children or chosen beneficiaries (so the first spouse can control ultimate disposition, preventing, say, a new spouse from inheriting those particular assets). Importantly, any appreciation of assets inside the bypass trust escapes estate tax at the second death – you already used exemption on those at first death, and they’re not in the survivor’s estate.
Example Benefit: If $5M goes into a bypass trust and doubles to $10M by the survivor’s death, that extra $5M growth is never subject to estate tax. With portability, if the spouse just kept that $5M, it would have grown in their estate and potentially eaten into the combined exemption or incurred tax if it exceeded it.
GST Planning: You can also allocate GST exemption to a bypass trust (often making it a generation-skipping trust for children/grandchildren). That way the first spouse’s GST exemption is utilized – something portability cannot achieve.
State Estate Tax: In states with their own estate tax (and no portability), a bypass trust funded up to the state exemption at first death can ensure no state exemption is wasted. This can save significant state estate tax at the second death. (Many estate plans in those states still use bypass trusts for this reason alone.)
Downsides: Trusts add complexity and cost. There’s legal work to set it up, possibly trust administration fees, and the surviving spouse may have to maintain separate accounts and records for the trust. The spouse’s access to the trust funds may be somewhat restricted (depending on trust terms, they might only get income or distributions for health, education, maintenance, support – the typical “HEMS” standard). This is often fine, but it’s less free-wheeling than outright ownership. Additionally, the trust assets do not get a basis step-up at the second death (since they aren’t in the estate), which could lead to higher capital gains if sold by heirs – although sometimes the trust can be drafted to grant a limited power of appointment to the surviving spouse to pull them into the estate for basis if advantageous, but that’s an advanced technique.
Trust Taxation: Assets in the bypass trust generate income that is taxed either to the trust or the spouse, but if retained in trust, trust tax brackets are compressed (meaning higher tax rates on income at much lower thresholds than individual rates). Surviving spouses often take the income out (which is fine), but if not, the trust could pay more income tax than if the assets were in the spouse’s name.
Irrevocability: Once the first spouse dies and the bypass trust is funded, its terms are irrevocable. This could be inflexible if laws or circumstances change drastically. For example, if the estate tax was later repealed or exemptions skyrocketed, the bypass trust might not have been needed and could even be a hindrance (no second step-up, etc.). Portability, on the other hand, lets the surviving spouse react to changes without being locked into a trust structure.

Many modern estate plans actually use a combination: they might direct some amount to a bypass trust (for state tax or asset protection reasons) and still file for portability to get any remaining DSUE. Or they use a QTIP trust approach with portability – leaving everything to a QTIP trust for spouse, which qualifies for marital deduction (so no tax) but then making a portability election to port the unused exemption (some planners call this the “best of both worlds,” as the trust can protect assets yet you still capture DSUE; a QTIP trust can even be “disclaimer-funded” or partially funded to fine-tune the approach).

Let’s crystallize the comparison with a quick side-by-side look at Portability vs. Bypass Trusts:

Portability (DSUE Election) 📝	Bypass Trust Planning 🔒
Simplicity: No mandatory trusts; survivor often inherits outright. ✅ Very simple administratively after first death.	Complexity: Requires creating and managing a trust at first death. ❗ More complex (legal fees, trust management needed).
Exemption Use: First spouse’s unused exemption carried over to survivor. Uses it later when survivor dies (or makes gifts).	Exemption Use: First spouse’s exemption used immediately at first death by funding the trust. Survivor’s estate doesn’t include those assets.
Protection: Offers no protection from creditors or remarriage – assets go outright to spouse (unless spouse chooses to put them in their own trust). ❌	Protection: Trust can shield assets from creditors, and ensure children (not a new spouse) ultimately inherit. Surviving spouse can’t lose these assets to lawsuit or imprudent spending. ✅
Growth/Apreciation: Assets inherited by survivor remain in taxable estate. If they grow beyond combined exemptions, that growth can be taxed. ❌ Also, DSUE is a fixed amount (doesn’t adjust for inflation or growth).	Growth/Appreciation: Assets in bypass trust (and all their growth) are outside survivor’s estate. ✅ Any appreciation escapes estate tax entirely. Great for assets expected to grow rapidly.
GST Tax: Does not transfer GST exemption. Survivor only has their own GST limit. ❌	GST Tax: Can allocate first spouse’s GST exemption to the bypass trust. ✅ Can effectively double GST exemptions for dynasty planning.
Basis Step-Up: Assets get stepped-up basis at first death (when spouse inherits) and again at second death (since they’re included in survivor’s estate). ✅ Double step-up can reduce capital gains for heirs.	Basis Step-Up: Assets in trust get step-up at first death, but not at second death (since they aren’t in survivor’s estate). ❌ This could mean more capital gains tax if assets appreciated a lot.
Remarriage Impact: If survivor remarries and new spouse dies first, first spouse’s DSUE is lost. ❌ Ported exemption isn’t permanent if “last spouse” changes (unless used prior via gifts).	Remarriage Impact: Trust is unaffected by survivor’s remarriage. ✅ Assets in trust stay put for beneficiaries regardless of any subsequent marriage. No risk of losing benefit.
State Estate Tax: Doesn’t help with state-level estate tax (most states don’t have portability). ❌ First spouse’s state exemption can be wasted.	State Estate Tax: Bypass trust can use first spouse’s state exemption immediately. ✅ Prevents state tax on that amount at second death.
Administration: One-time filing of Form 706 is the primary task. After that, survivor handles assets as their own. ✅	Administration: Ongoing trust administration: separate tax ID, possibly separate accounting. Surviving spouse may need trustee approval for some actions. ❗
When Ideal: When estate is below combined exemption, or for ease and second basis step-up. Great if spouse needs full control/use of assets. Also as a backstop if planning wasn’t done.	When Ideal: When asset protection is important, in second marriages, or for very large estates likely to grow (to avoid future tax). Also in states with estate tax or when wanting to lock in GST plans.

As you can see, portability shines for simplicity and maximum flexibility for the surviving spouse, while bypass trusts excel in control and protecting wealth (and its growth) from taxation and other risks. The good news is that these strategies aren’t mutually exclusive. You might, for example, leave an amount equal to your state estate tax exemption or GST exemption in a trust, and leave the rest to your spouse outright and then elect portability for any leftover federal exemption. This can thread the needle by addressing state/GST issues while still using portability.

With the high federal exemption in effect now, many couples opt for a “wait and see” approach: they might include provisions in the will or trust that allow the survivor (or executor) to decide after the first death whether to fund a bypass trust (via disclaimer or formula) or rely on portability. Given the uncertainty of future tax laws, this flexibility is valuable. For instance, if at the first death the exemption is very high and the estate is modest, the survivor might choose not to complicate things with a trust and just file for portability. But if the laws change or the estate is large, they could fund a trust.

Key takeaway: Portability has largely eliminated the necessity of trust planning purely for federal estate tax in many situations. It has provided couples an easier path to use both exemptions. However, it hasn’t eliminated the benefits of trusts for other reasons. Many estate planners advise using portability as a safety net: even if you set up a bypass trust, still file that Form 706 and elect portability just in case (for example, if the bypass trust wasn’t fully funded to the max, any small DSUE left can be ported, plus it covers scenario of trust being insufficient if assets balloon in value or if spouse outlives trust distributions and uses up funds). And in cases where a trust isn’t needed for non-tax reasons, portability offers a wonderfully straightforward solution to double the estate tax cushion.

Next, let’s clarify some key concepts and definitions that we’ve been discussing, to ensure all the terminology is clear. Then we’ll cover how state estate taxes differ, who’s responsible for portability, and finally answer frequently asked questions.

Key Concepts and Definitions in Portability Planning

Understanding portability involves a handful of tax terms and concepts. Let’s break down the important ones in plain English:

Estate Tax & Exemption: The federal estate tax is a 40% tax on the value of one’s estate above a certain threshold (the exemption). The exemption is often called the Basic Exclusion Amount (BEA). For example, if the exemption is $12.92 million and someone dies in that year, the first $12.92M of their estate is “excluded” from tax. Only the excess is taxed. This exemption is unified with the gift tax as well – meaning large lifetime gifts count against it (see unified credit below). The exemption amount changes: it’s indexed for inflation and has been as high as $12–13M in recent years. Without legislative action, it will drop roughly in half in 2026 (to around $5–7M range). Historically it was much lower (e.g., $3.5M in 2009, $5M in 2011, etc.). Only a very small percentage of estates owe federal estate tax today because of the high exemption.
Applicable Exclusion & Unified Credit: The term Applicable Exclusion Amount often refers to your personal exemption plus any DSUE you’ve received. It’s basically the total amount you can leave tax-free. Correspondingly, the unified credit is the tax credit equivalent of that exclusion (the credit that offsets the tax on that excluded amount). The unified credit is “unified” because it covers both gift and estate taxes under one umbrella. When we say someone “used part of their exemption” by gifting, technically they used part of their unified credit during life. On Form 706, you’ll see calculations involving the credit amount. But conceptually, you can think in terms of the dollar exemption for simplicity.
Deceased Spousal Unused Exclusion (DSUE): This is the star of the show for portability. DSUE is the amount of the deceased spouse’s exemption that was not used on their own estate. If they had no taxable estate, it could be nearly their full basic exclusion. If they had a taxable estate that used $X of their exclusion, then their DSUE is the remainder. For example, if the exclusion was $11.7M and the decedent’s estate used $3M of it (on assets to kids, etc.), the DSUE would be $8.7M. Portability is the mechanism to transfer DSUE to the surviving spouse. Note: DSUE is defined in the tax code (Section 2010(c)) and by formula cannot exceed the basic exclusion (so if the exclusion was, say, $5M when someone died, DSUE maxes at $5M even if the exclusion later increases).
Portability Election: This refers to the choice the executor makes on Form 706 to allow the DSUE to be transferred. It’s often phrased as “electing portability.” By law, an executor must affirmatively elect it (or by default via filing the return, as we discussed). Portability was first introduced by the Tax Relief Act of 2010 (effective for 2011 deaths) and then made permanent by the American Taxpayer Relief Act of 2012. The election, once made, is irrevocable – meaning once the due date passes, if you filed and didn’t opt out, you can’t change your mind later to undo portability (not that many would want to). Conversely, if you opted out or failed to file, you can’t later opt in (unless under those late relief provisions). Essentially, it’s a one-time chance per decedent.
Form 706: This is the United States Estate (and Generation-Skipping Transfer) Tax Return. It’s typically required for estates that exceed the filing threshold (which equals the basic exclusion in effect for that year, or lower if prior taxable gifts push it over). However, it’s also filed in cases of portability election when not otherwise required. Form 706 is a comprehensive form where you list the decedent’s assets, deductions, and compute any tax due. For portability, the key parts are:
- Part 2 – Tax Computation: where you calculate the taxable estate and tentative tax.
- Part 6 – Portability of DSUE: which includes Section A (opt out), Section B (for QDOTs if any), Section C (the DSUE amount calculation to be ported), and Section D (if the decedent themselves had DSUE from a prior spouse).
- The form requires detailed schedules (A through I) for different asset classes, but as noted, if not required to file except for portability, you can simplify the entries for assets going to spouse/charity (still, you must show enough to justify deductions).
- Form 706-NA exists for non-resident, non-citizen decedents (no portability there, as noted).
Marital Deduction: The marital deduction is a cornerstone of estate tax for spouses. It’s an unlimited deduction for assets passing to a surviving spouse (who is a U.S. citizen). This means you can leave any amount to your spouse and none of it will be subject to estate tax at your death. The marital deduction is why many estates owe no tax at the first death. However, as we discussed, it can lead to the first spouse’s exemption being unused – hence the need for either portability or trust planning. If the surviving spouse is not a U.S. citizen, the marital deduction is not automatic; it requires assets to go into a Qualified Domestic Trust (QDOT) which then defers estate tax (tax will be levied when distributions are made or at the second spouse’s death from that trust). The marital deduction, combined with portability, allows many couples to defer and ultimately avoid tax (defer at first death, avoid at second by having two exemptions). Prior to portability, the marital deduction would only defer tax unless a bypass trust soaked up the first exemption.
QDOT (Qualified Domestic Trust): This is a special trust designed for a non-citizen surviving spouse. Since a non-citizen spouse doesn’t qualify for the unlimited marital deduction outright (the concern being they could leave the U.S. with assets and avoid estate tax), a QDOT holds the marital assets. Estate tax on those is deferred, but any principal distributed to the spouse from the QDOT is subject to estate tax at that time, and any remaining in the trust gets taxed at the surviving spouse’s death. For portability: the executor can still elect portability for a non-citizen spouse, but as noted earlier, the DSUE amount is not fully available to the spouse until the QDOT’s liability is settled. Practically, this means the surviving spouse won’t be able to use the DSUE for gifts or otherwise until either they become a citizen or at their death when the trust terminates and pays tax. Only then is the DSUE finalized. The IRS requires the executor to calculate a preliminary DSUE on the Form 706, and it may be adjusted as QDOT distributions are taxed. In summary, portability is more complicated with a QDOT, but possible – it basically preserves the exemption so that once the spouse is eligible (citizenship or death), the unused amount can be applied. Many QDOT plans might not rely on portability though; they might use the decedent’s exemption immediately on non-QDOT transfers if any.
Last Deceased Spouse: This term we’ve discussed in pitfalls – it’s the key rule for how DSUE is used. A surviving spouse’s ability to use DSUE is tied to their “last deceased spouse,” meaning the most recent spouse who died while they were married to them. If you only have one marriage that ends in death, that person is your last deceased spouse forever (even if you remarry, until another spouse dies). If you remarry and your new spouse is alive, you still have the DSUE from your last deceased (i.e., first) spouse and can use it until/unless the new spouse dies. If the new spouse dies, they become the last deceased spouse, and any unused DSUE from the first spouse is lost at that moment. So a surviving spouse who has DSUE should be mindful of this if entering a new marriage. There is no concept of “stacking” multiple DSUEs – you can’t accumulate two predeceased spouses’ exemptions at the same time. (The Form 706 Part 6 Section D is used for a scenario where someone had multiple spouses and had received DSUE from one, then maybe used some before losing it, etc., but that’s a complex case. Generally, only one DSUE can be in effect for a person at any given time.)
GST (Generation-Skipping Transfer) Tax Exemption: Each person also has a GST exemption (equal to the estate/gift exemption amount). This covers transfers to grandchildren or further generations (or to certain trusts deemed to skip a generation). Unlike the estate exemption, this is not portable. If the first spouse dies without using their GST exemption (for example by funding a trust for grandkids or assigning it to a life insurance trust, etc.), that exemption is wasted. Many married couples plan to use both GST exemptions by setting up trusts (like each spouse might have a trust that can benefit kids and then grandkids, and allocate GST exemption to it at death). If you simply leave everything to the surviving spouse and rely on portability, you are effectively going to waste the first spouse’s GST exemption. This is fine if GST planning isn’t needed (e.g., maybe you don’t intend to leave assets skipping a generation). But if it is a goal, consider using a generation-skipping trust at the first death. Some sophisticated plans do both: e.g., the first spouse’s will might say “if my spouse survives, create a family trust (bypass trust) and allocate my GST exemption to it; also give spouse an option to disclaim into a GST trust for grandkids,” etc., so that those exemptions don’t vanish. Portability only addresses the estate/gift part.
Section 2010 and Regs: The technical side: Internal Revenue Code §2010(c) is where portability lives. It sets the rules for the basic exclusion, DSUE, and the requirement that the election be made on a timely return. Treasury Regulations §20.2010-2 and §20.2010-3 provide details on making the election and computing DSUE, including the part that says the IRS can examine the first spouse’s return anytime to verify DSUE. There’s also Reg. §301.9100-3 which is the general rule for late election relief (the one under which the IRS granted relief via revenue procedures). While you don’t need to know the code numbers, it’s evidence that portability is now well-baked into law.

Now that we’ve clarified these terms, you should feel more comfortable with the jargon like DSUE, unified credit, QDOT, etc. Essentially, Form 706 + Portability = surviving spouse gets a bigger exclusion, whereas bypass trust = first spouse’s exclusion used in trust form. Both aim to prevent losing that first spouse’s coupon.

Next, we’ll cover how state estate or inheritance taxes can complicate the picture (because they vary widely and portability at the state level is rare). After that, we’ll identify who the key players are in making the portability election and fulfilling the requirements. Then we’ll summarize pros and cons and notable court rulings, and finally address some frequently asked questions.

Federal vs. State Estate Tax: Key Differences and Portability Implications

When planning for portability, it’s crucial not to overlook state-level estate or inheritance taxes. The federal estate tax might grab headlines, but if you live (or own property) in certain states, the state tax can also bite – and the rules are different.

Not all states have an estate tax. As of 2025, 12 states plus the District of Columbia impose a state estate tax. These states include (but aren’t limited to) New York, New Jersey (estate tax repealed in 2018, but NJ has inheritance tax), Massachusetts, Illinois, Minnesota, Oregon, Washington, Maryland, Connecticut, Maine, Rhode Island, Vermont, Hawaii, and DC. A few others have an inheritance tax (e.g., Pennsylvania, Nebraska, Iowa, Kentucky) which taxes the recipients of inheritances rather than the estate, usually exempting close relatives like spouses or children. Most states have much lower exemption amounts than the federal ~$12M. For example, Massachusetts and Oregon have a $1 million exemption (yes, that low), Illinois $4M, New York around $6.58M (2025), Washington around $2.2M, etc. Connecticut has been an exception, having gradually raised its state exemption to match the federal (set to equal federal by 2023, around $12M).

Now, the *big issue: portability at the state level is generally unavailable. The concept of portability was a federal law change and most states with estate taxes did not adopt similar provisions. This means if you’re a resident of, say, Massachusetts, and one spouse dies, Massachusetts will not allow you to add the first spouse’s unused $1M exemption to the second spouse’s exemption. If the couple had $2M in assets all in the husband’s name and he leaves it all to his wife, at the husband’s death Massachusetts charges no tax (spousal transfer is exempt). But now the wife only has a $1M exemption for Massachusetts. When she later dies with $2M, about $1M will be taxable by MA (16% tax on the amount over $1M). If instead some planning had been done – for example, the husband’s will could put $1M in a bypass trust for the wife (using his MA exemption) – then the wife’s own $1M exemption still covers the rest, and no MA tax either time. But pure portability (federal) with no trust would have failed to use the husband’s state exemption.

The only two states that currently allow a form of portability of their state estate tax exemption are Hawaii and Maryland:

Hawaii – Hawaii was actually a pioneer here; it adopted portability for its estate tax exclusion relatively early (Hawaii’s exemption is around $5.5M, and a surviving spouse can use a deceased spouse’s unused portion if an estate tax return is filed with Hawaii). This means in Hawaii, similar to federal, a couple can effectively shield double the Hawaii exemption, but they must file a Hawaii estate tax return after the first death to elect it.
Maryland – Maryland introduced portability for state estate tax as part of some reforms when aligning their exemption (Maryland is unique because it has both an estate tax and an inheritance tax, though spouses are exempt from inheritance tax). Maryland’s estate tax exemption was set to align with federal but then decoupled at $5M (currently $5M state exemption). They allow portability of the Maryland exemption between spouses, so a married couple in MD can potentially shield $10M from Maryland estate tax with proper election. Again, filing a state estate tax return at first death is required to elect that.

Aside from those, no other state with an estate tax offers portability. Thus, in states like New York, Massachusetts, Oregon, etc., the only way to utilize both spouses’ state exemptions is typically to use trust planning. Usually, that means a bypass trust or “credit shelter trust” funded up to the state exemption amount at the first spouse’s death. The remainder can go to the spouse or a QTIP trust for the spouse (qualifying for marital deduction at state level). Then at second death, that trust is not taxed by the state (because it was sheltered by first exemption) and the survivor’s own exemption covers the rest up to its limit.

Inheritance taxes (found in a few states) generally don’t have the concept of an exemption amount per se (or if they do, it’s per beneficiary), so portability isn’t relevant there at all. For example, Pennsylvania’s inheritance tax doesn’t tax assets passing to a spouse (0% rate for spouse), so the marital transfer is free anyway; assets to children are taxed at 4.5%. Portability doesn’t change inheritance tax outcomes – it only matters for estate taxes which are structured like the federal system.

If you’re in a community property state (like California, Texas, etc.), interestingly, those states don’t have their own estate taxes. Community property can help in that both halves of community property get a basis step-up at first death, but that’s about income tax, not estate tax. Since these states have no estate tax, you only worry about the federal system, and there portability covers you.

One more state-related nuance: State estate tax thresholds can be “cliff” thresholds in some states, meaning if you exceed the exemption even by a bit, the tax can apply to the whole estate. (New York had a notorious “cliff” – above 105% of the exemption, you lost the exemption entirely.) This is beyond our scope, but just a reminder that state taxes can be tricky, and no portability means planning is often needed if you’re anywhere near the limits. Portability at the federal level doesn’t solve a state tax problem, which catches some people off guard. For instance, a couple might think their $5M estate is fine (under federal $12M each), but in Oregon with $1M each, they could face state tax on $3M if they didn’t use the first exemption.

The good news: If you elect federal portability, it does not harm anything at the state level – it’s just that it doesn’t provide a benefit there. You can still do both: file the federal 706 for portability and possibly fund a state exemption trust via the estate documents to utilize the state exemption. The complexity might be a bit greater (you might have to file a state estate tax return if using a trust, or at least document values), but it’s usually worth it in high-tax states.

In summary, when thinking about portability, always consider your state’s tax landscape. If you’re in a state with no estate tax, great – you can focus on the federal side (but watch out if you move or if state laws change). If you’re in an estate tax state, evaluate whether to incorporate trusts to capture state exemptions because state portability is likely not there to save you. And if you move states (e.g., retire to Florida which has no estate tax), that could change the strategy (Florida residents might do simpler plans and rely on portability, whereas a New York resident might lean into trusts).

Finally, keep in mind that state estate tax rates are generally lower than the federal 40% (often in the 10-16% range), but they kick in at much lower levels. So for many families, a state estate tax is a more realistic concern than the federal. Planning for both levels can be a balancing act – sometimes couples intentionally use a bypass trust for the first spouse’s state exemption and file for federal portability to get the best of both.

Now that we’ve covered the state angle, let’s talk about who is responsible and involved in making the portability election and executing this plan.

Who Does What: Roles of the Executor, Surviving Spouse, IRS, and Advisors

Making the portability election involves a few key players, each with specific responsibilities. Let’s break down who’s involved and what their role is:

Executor / Personal Representative: This is the most important player for portability. Under the law, only the executor of the deceased spouse’s estate has the authority to elect portability (or to opt out). The term “executor” in this context means the person legally authorized to administer the decedent’s estate – either named in the will (executor), or appointed by a court (administrator, if no will), or any person in possession of assets if no formal executor is appointed. If there are multiple co-executors, any one can sign the return, but ideally they should all coordinate and agree. The executor is responsible for preparing and filing the Form 706. They must ensure it’s done timely (or within relief periods) and properly. If an executor decides not to elect portability, they indicate that by checking the opt-out box on the form (though it’s rare to have a good reason to opt out). In cases where no executor is appointed (maybe everything was in joint ownership or a trust, so the family didn’t need probate), the IRS considers any person in actual or constructive possession of property as an executor for tax purposes. That could be the surviving spouse, a child, or a trustee. Those individuals then have the responsibility to file the return if needed. The executor’s fiduciary duty can extend to considering what’s best for the beneficiaries – as we noted, courts have even held that an executor should elect portability if it benefits the surviving spouse. So executors should always ask: “Is there a surviving spouse? Should I be filing a Form 706 to elect portability?” Even if all assets went to the spouse, the executor might be doing the spouse a great service by filing. Executors also gather the needed valuations and documents, possibly hire appraisers or accountants, and sign the return under penalty of perjury. In short, the executor “holds the pen” on portability – without their action, it won’t happen.

Surviving Spouse: The surviving spouse is the beneficiary of portability. However, if they are not the executor, they have no direct power to file a Form 706 or make the election themselves. This is why communication is key. A surviving spouse should be proactive – if they are not handling the estate administration, they should discuss portability with whoever is. The surviving spouse can request or petition that a return be filed for portability. If an executor refuses, as in the Vose case, the spouse might seek legal remedy, but that’s a last resort. If the surviving spouse is the executor (which is common when the spouses had a straightforward estate and the survivor is named executor), then they essentially wear both hats: they’ll handle filing the return for their deceased spouse’s estate, thereby securing the DSUE for themselves. It’s a bit like claiming a benefit for yourself through your role as executor. Surviving spouses also need to maintain records of the DSUE. When they eventually make taxable gifts or pass away, they (or their executor) must properly apply the DSUE. For example, on the surviving spouse’s gift tax return (Form 709) or estate return, there are lines to enter any DSUE amount from a predeceased spouse. It helps for the surviving spouse to keep a copy of the first spouse’s filed Form 706 and the calculation of DSUE. In practice, the IRS now has a database of DSUE: when an estate tax return is processed with portability, the IRS often issues a closing letter that states the DSUE amount transferred. They also updated the Form 706 instructions to say the surviving spouse can call the IRS to confirm the DSUE amount available (especially useful if the spouse is about to make large gifts). So the surviving spouse should be aware of how much DSUE they have, and also any conditions (like the remarriage rule). Finally, surviving spouses may want to involve their planners to decide how to best use that DSUE – whether to make gifts to reduce their estate, etc.

Internal Revenue Service (IRS): The IRS’s role is to process and enforce the election. They receive the Form 706, record the DSUE amount, and later cross-check it when the surviving spouse uses it. The IRS can audit or examine the first spouse’s return. Notably, the law allows the IRS to examine the first decedent’s return at any time (without regard to the normal statute of limitations) for purposes of verifying the DSUE, when the surviving spouse later uses it. However, the IRS cannot at that point assess new tax on the first decedent’s estate (beyond the normal statute window), except to adjust the DSUE. For example, if a deduction was incorrectly claimed which inflated DSUE, they can fix that and reduce the DSUE for the survivor. The IRS also provides guidance and relief: as discussed, they issued extended deadlines via revenue procedures, and provide instructions clarifying how to fill the form for portability-only filings. The IRS estate tax division issues Closing Letters after a Form 706 is reviewed/accepted, which can serve as proof that portability was elected and what the DSUE is (since 2015, you have to request a closing letter or check an account transcript to confirm DSUE). The IRS also has an interest in executors not abusing the system – for instance, if an executor tries to shortchange valuations to maximize DSUE, that could be scrutinized. But given no tax is due, these valuations only matter if they affect the share to non-spouse (like in Rowland case, they needed values to compute the true marital share vs non-marital share). By and large, the IRS’s stance on portability has been accommodating; they want people to make the election if desired, which is why they keep extending relief. They’ve even said the 5-year extension is to ease burden on both taxpayers and the IRS. So think of the IRS here as providing the mechanism and safety nets, but also as the checker that everything is in order.

Attorneys and CPAs (Advisors): Estate planning attorneys, tax attorneys, and CPAs or enrolled agents often play a crucial role behind the scenes. They advise the executor and surviving spouse on whether to elect portability, prepare or review the Form 706, ensure compliance, and coordinate any trust funding if part of the plan. An attorney drafting an estate plan might include clauses about portability (for instance, instructing or empowering the executor to file a return, or requiring cooperation). After the first death, the family’s attorney will often say “we should file an estate tax return to elect portability” as part of the post-mortem planning checklist. CPAs might be engaged to do the form preparation, which involves gathering all asset information, applying any available deductions (marital, charitable, debts, etc.), and calculating DSUE. They also help with obtaining valuations (or applying alternate valuation date if needed, etc. – though alternate valuation usually matters only if tax is due or refund scenario). These professionals ensure things like extensions are filed on time if needed and that the proper wording is on a late-return per Rev Proc 2022-32, etc. If a family missed the deadline, attorneys might help file the late return under the new procedure or prepare a private letter ruling request if beyond 5 years. Basically, advisors are the ones who make sure the executor doesn’t accidentally drop the ball or mis-fill the form. They also weigh the pros and cons: in some cases, if the surviving spouse is terminally ill or there are no children (money going to charity anyway), they might discuss whether portability is necessary. But usually, they lean toward “it’s worth doing.” Cost-wise, hiring a professional to do a no-tax Form 706 might run a few thousand dollars, depending on complexity – that’s often mentioned to clients as the only “cost” of portability, which compared to potential tax savings is minor. Advisors also counsel on using the DSUE: for example, they might recommend the surviving spouse consider making gifts to utilize the deceased spouse’s exemption (especially if law changes might reduce the survivor’s own exemption in future). This could lock in the benefit. They’ll also remind the spouse’s future estate executor to claim the DSUE when the time comes.

The Courts: Typically courts aren’t involved unless there’s a dispute – but as we’ve seen, courts may step in if, say, beneficiaries and a surviving spouse clash over filing the return (the spouse wants it, executor doesn’t). Also if the IRS and estate disagree on whether a portability return was proper, that might go to court (like the Rowland case, where the estate is fighting the IRS’s determination that the return was incomplete/untimely under the relief provisions). So courts can influence how rules are interpreted (e.g., confirming whether IRS appropriately denied DSUE or whether an executor had a duty to elect, etc.). Generally though, if everyone does their job (executor files correctly, IRS accepts it), court involvement is not needed.

Heirs/Beneficiaries: They aren’t directly involved in the election, but they have a stake in the outcome. Children or other heirs should be aware that electing portability could save them taxes when the surviving parent dies. However, in some cases (blended families), children from a first marriage might not care about saving tax for the step-parent’s estate (especially if they aren’t beneficiaries of that estate). This can cause the conflict we mentioned. Ideally, good estate planning tries to align these interests or mandate an action to avoid discretion. But beneficiaries might push one way or another if they realize the implications.

To summarize roles:

The Executor executes the portability election by filing the required paperwork.
The Surviving Spouse enjoys the benefit and should advocate for it if not in control.
The IRS records and regulates the process, giving frameworks and ensuring fairness.
Advisors guide and implement the technical steps, making sure nothing is missed.
And in contentious or complex situations, the courts can serve as an umpire to enforce duties or interpret rules.

When everyone performs their role properly, the end result is the first spouse’s legacy is partly carried on as a tax shield for the second spouse. The family retains more wealth, and it’s one less thing to worry about in an already difficult time.

Now, let’s weigh the overall pros and cons of using portability (versus not using it), and then we’ll note some real-world court rulings that taught valuable lessons about this election.

Pros and Cons of Portability (Electing the DSUE)

Like any estate planning tool, portability has both advantages and disadvantages. Here is a summary of the major pros and cons to consider:

Pros of Electing Portability ✅	Cons of Electing Portability ❌
Doubles the Estate Tax Exemption: The surviving spouse can effectively double their estate tax threshold (e.g., from ~$13M to ~$26M under current law), potentially saving up to 40% tax on millions of dollars. This is a straightforward way to maximize a couple’s tax-free transfer capacity.	Must Remember to File (Deadline Sensitive): Portability is not automatic. The executor must prepare and file Form 706 in time. This adds an administrative task during a period of grief. Missing the deadline (9 months, or extended/relief deadlines) means losing the benefit, unless relief is obtained.
Simplicity and Flexibility for Surviving Spouse: No mandatory trusts are required solely for tax reasons. The surviving spouse can receive assets outright and use or invest them freely. There’s no need for split trusts or complicated asset retitling during life to “balance” estates. This simplicity also often means lower legal costs upfront and easier administration.	No Protection for Asset Growth: Portability does not shield future appreciation of assets from estate tax. All assets stay in the surviving spouse’s estate. If those assets grow substantially, they could exceed the combined exemption by second death, resulting in tax. (Bypass trusts, in contrast, lock in values and keep growth out.)
Captures Otherwise Lost Exemption: In cases where the first spouse leaves everything to the survivor (common), the first spouse’s entire exemption would be wasted without portability. Electing portability preserves that otherwise lost benefit. It’s essentially “use it after death, instead of lose it.”	DSUE Can Be Lost if Remarriage Occurs: The surviving spouse is only guaranteed the DSUE until/unless they remarry and outlive the new spouse. If a new spouse dies first, the prior DSUE vanishes. So portability can be nullified by remarriage scenarios, unless the survivor uses it (via gifting) before that happens.
Surviving Spouse Can Use DSUE for Lifetime Gifts: Portability isn’t just for after death – the surviving spouse can use the inherited exemption to make tax-free lifetime gifts immediately. This can be great for wealth transfer planning (e.g., the survivor can gift more assets to children without gift tax). The law specifies DSUE is applied to gifts before the survivor’s own exemption, allowing optimal use.	Doesn’t Apply to GST Tax: Portability does not transfer the GST exemption. If generation-skipping planning is a goal (leaving assets to grandchildren or beyond), the first spouse’s GST exemption still requires special planning (like a trust). Relying solely on portability could mean only one spouse’s GST exemption is used, potentially leading to GST tax on some transfers.
Low Cost “Insurance” Against Future Law Changes: Given the uncertainty of future tax laws (exemptions might decrease), having that extra DSUE from a deceased spouse is like insurance. It costs only the effort/professional fee to file a return, and it safeguards against a scenario where the survivor’s own exemption drops or their estate grows.	Minimal Benefit if Estate is Small or Going to Charity: In some situations, portability might not be needed – e.g., if the surviving spouse’s estate will clearly never exceed even their single exemption (very modest estates), or if the survivor plans to leave most assets to charity (which would be estate-tax free anyway). In such cases, the effort to file might not yield any actual tax savings. (Though often it’s hard to be certain of the future.)
No Negative Impact on Basis Step-Up: All assets inherited by the surviving spouse get a step-up in income tax basis at the first death, and with portability, they’ll be in the survivor’s estate for a second step-up at second death. This can reduce capital gains tax for heirs. (A pro compared to bypass trusts, which forgo a second step-up.)	Administrative and Professional Fees: Filing an estate tax return when not otherwise required does incur some cost – possibly several thousand dollars for CPA/attorney services, valuations (though estimates often suffice for marital assets), and time spent gathering info. Some very simple estates may find this an annoyance or expense they’d rather skip (but again, skipping could be penny-wise, pound-foolish if future tax looms).
Extended Time and Easier Reporting Available: Thanks to IRS rules, even if you miss the initial 9-month deadline, estates under the threshold have up to 5 years to file for portability. Also, reporting requirements are eased (you can use value ranges for certain assets). This makes the election more forgiving and less onerous than it used to be.	Not Available for Non-Citizen Decedent (and tricky for Non-Citizen Spouse): If the first spouse was not a U.S. citizen or resident, you cannot elect portability at all. And if the surviving spouse isn’t a U.S. citizen, you need a QDOT and the DSUE isn’t usable until conditions are met. In international cases, portability is limited.

Overall, the pros of portability far outweigh the cons for most typical married couples. The main “cons” are really just caveats: remember to file, know the remarriage rule, and understand it doesn’t fix everything (like GST or state taxes). The pros – doubling exemption, simplicity, flexibility – align with most people’s goals of minimizing taxes without complicating their lives.

Think of portability as a one-time opportunity that’s easy to take advantage of (file a return) but impossible to get later if you skip it (unless within the special relief period). There’s a popular saying among estate attorneys: “You can plan for portability or plan to pay tax.” While a bit tongue-in-cheek, it highlights that if you ignore portability when it’s available, you may be writing a check to the IRS that you didn’t have to.

Now, let’s look at a few real-world legal rulings that emphasize the importance of doing portability right, and then we’ll wrap up with frequently asked questions.

Court Rulings and Lessons Learned in Portability Cases

Portability, being a relatively new feature in estate tax law, has had a few notable court cases and IRS rulings that provide guidance (and cautionary tales) on how the rules are applied. Here are a couple of key rulings and what we learn from them:

Matter of Estate of Vose (Oklahoma Supreme Court, 2017): We’ve touched on this scenario earlier – it addressed whether an executor has a duty to elect portability for the benefit of the surviving spouse. In Vose, the decedent’s husband (surviving spouse) wanted the estate’s administrator (one of decedent’s children from prior marriage) to file an estate tax return to elect portability. The administrator was reluctant, possibly because it didn’t benefit the children (who were the main heirs of the first estate) and it would cost the estate time/money to do. The case went to the Oklahoma Supreme Court, which ruled that the administrator did have a fiduciary duty to elect portability because it was in the interest of preserving the estate’s value for the surviving spouse. Essentially, even though federal law gives the executor discretion to elect or not, the court said under state fiduciary law, an executor should not unreasonably withhold that election if it’s clearly beneficial to the surviving spouse and doesn’t harm the estate. The court compelled the executor to file the return and make the election. Lesson: Executors should act in the interest of all beneficiaries, including a surviving spouse. If an executor refuses to make a portability election out of spite or self-interest, they could be overruled by a court. This case also suggests it’s wise to address portability in prenuptial or estate agreements (so everyone’s on the same page about filing or not). For surviving spouses, Vose is encouraging because it means the legal system can support them if an uncooperative executor tries to deprive them of a valuable tax benefit.

Estate of Fay Rowland / Estate of Billy Rowland (Tax Court proceedings, analysis 2023-2025): This ongoing matter (as of 2025) highlights the importance of timeliness and completeness in a portability filing. In short: Fay died in 2016 with an estate under the threshold, so no mandatory filing. Her executor (not her spouse, interestingly – spouse was Billy) didn’t file by the 9-month deadline, but filed within the 2-year extended window provided by Rev. Proc. 2017-34 (which allowed until Jan 2, 2018 for decedents dying in early 2016). They marked the return as “filed pursuant to Rev. Proc. 2017-34 to elect portability.” However, on that Form 706, they took the relaxed reporting too far: they listed assets but put $0 or “unknown” for values, essentially providing no real data, and just estimated the total estate value as $3M on one line. They probably thought since most went to spouse or charity, exact values weren’t needed. The IRS accepted the filing initially (since they got it by the cutoff date). Billy (surviving spouse) then filed his own Form 706 when he died in 2018, claiming about $3.7M DSUE from Fay. The IRS audited Billy’s return and said “No, you cannot have that DSUE because Fay’s return was not properly filed – it was late (missed extended deadline by a day or so?) and incomplete in information.” The IRS argued Fay’s return didn’t meet the requirements of the relief procedure (which required a “complete and properly prepared” return). The case ended up in Tax Court. So far, the analysis suggests the court was inclined to agree with the IRS: that while Fay’s return made the election, it was filed after the extended deadline (arrived Jan 2, 2018 which was the cutoff, though maybe postmark issues) and crucially, it failed to include required valuations given her estate plan had a fractional formula (a portion to spouse, portion to others). The regulations say if, for example, a trust is funded with “an amount equal to the exemption” and the rest to spouse, you do need to value because the spouse’s share depends on the total. Fay’s executor seemingly tried to avoid valuing by claiming everything as marital/charitable. The court looked at whether substantial compliance or equitable arguments could save the day, and it didn’t seem optimistic. Lesson: If you’re using the simplified late filing relief or even a timely filing, you must still rigorously follow the form’s instructions and regulatory requirements. Don’t assume the IRS will accept a half-done return. If part of the estate goes to non-spouse beneficiaries, you cannot just say “well, estate under threshold, spouse got a part, so we won’t value anything.” That strategy failed and cost the surviving spouse’s estate potentially a lot in taxes (losing a $3.7M exemption means about $1.5M more tax). This underscores: even when no tax is due, take the filing seriously. If necessary, get appraisals for property or give good faith value ranges as allowed, but don’t put zero or leave blanks for asset values that matter to the outcome.

Private Letter Rulings (various): Before the IRS expanded the relief, numerous families ended up requesting Private Letter Rulings (PLRs) for permission to file late portability elections. PLRs aren’t binding precedent for others, but generally the IRS was sympathetic if the estate was under the limit and someone just missed the deadline inadvertently. Most PLRs granted relief if the estate provided a decent excuse (like “we didn’t know; no advisor told us; we discovered later and filed promptly after discovery”). However, PLRs are costly (~$10,000+ user fee plus attorney fees) and time-consuming. The existence of dozens of PLRs granting relief was part of why the IRS extended the relief window to 5 years – to avoid so many requests. Lesson: The IRS prefers people use the automatic relief than flood them with PLRs. If you do miss even the 5-year window, you might still try a PLR, but success isn’t guaranteed. One should note the relief is only for estates under the threshold. If an estate was above the threshold and simply failed to file (which would mean they also failed to pay estate tax due – a much bigger problem), that’s not a scenario for simple relief; that’s noncompliance with required filing and likely penalties.

Other Cases: There haven’t been a ton of court cases yet specifically on portability, partly because the law is relatively new and also because many issues are resolved via IRS procedures. But one could imagine future disputes: e.g., if the IRS audits a first spouse’s estate years later and reduces the DSUE (maybe they found a mistake in the exclusion used), the surviving spouse’s estate might fight that. So far, it seems the tax courts are reinforcing that to benefit from this generous portability provision, taxpayers have to follow the rules closely.

State cases: Apart from Vose, other states might confront similar issues on executors’ duties. We may see more litigation if, say, an executor fails to elect and the surviving spouse’s estate pays tax – the heirs might sue the executor for negligence. That hasn’t made big headlines yet, but it’s a possible area of fiduciary litigation in the future. It’s a good practice for executors to obtain written consent or waiver from a surviving spouse if they truly believe not filing is fine (maybe due to very low assets). This could protect them from later claims.

In summary, the legal rulings remind us:

Do it right, or don’t get the benefit. Timely, correct filing is essential.
Executors should err on the side of electing. If in doubt, elect portability, as failing to can breach duty to the spouse.
Courts and IRS are largely taxpayer-friendly on this, but only if you meet them halfway by following procedures.

Armed with all this knowledge, let’s answer some Frequently Asked Questions that people often have about electing portability on Form 706.

Frequently Asked Questions (FAQs) about Portability and Form 706

Q: Do I need to file Form 706 if the estate is below the exemption just to elect portability?
A: Yes. Even if no estate tax is owed, filing Form 706 is required to transfer the deceased spouse’s unused exemption to the surviving spouse. No return means no portability.

Q: Is portability automatic for surviving spouses?
A: No. Portability isn’t automatic – the deceased spouse’s executor must actively elect it by filing an estate tax return (Form 706) on time. Without that filing, the unused exemption is lost.

Q: Can I file a Form 706 for portability after the 9-month deadline?
A: Yes. Under current IRS rules, certain estates can file up to 5 years after death to elect portability, provided the estate was under the filing threshold. (You must note the late filing is per Rev. Proc. 2022-32.)

Q: What happens to the DSUE if the surviving spouse remarries?
A: If the surviving spouse remarries and their new spouse dies before them, the first spouse’s DSUE is lost. Only the unused exemption of the last deceased spouse is available to a surviving spouse at any given time.

Q: Does portability apply to state estate taxes?
A: No, not in most cases. State estate tax portability is generally not available (Maryland and Hawaii are exceptions). For state estate tax planning, couples often use trusts to utilize both spouses’ state exemptions.

Q: Can the surviving spouse use the inherited exemption for lifetime gifts?
A: Yes. Once portability is elected, the surviving spouse can use the deceased spouse’s unused exemption for future taxable gifts or their own estate. This effectively raises their gift tax exemption and estate exemption.

Q: Is electing portability ever a bad idea?
A: No, not usually. There’s little downside apart from the effort and cost to file. In most cases, electing portability is beneficial “insurance” even if you don’t end up needing the extra exemption.

Q: If there’s no surviving spouse, do we need to worry about portability?
A: No. Portability only benefits a surviving spouse. If the decedent isn’t survived by a spouse (or the spouse also died simultaneously), no portability election is needed or possible.

Q: Does the surviving spouse get proof of the DSUE after filing?
A: Yes (indirectly). The IRS will record the DSUE; typically the estate receives a closing letter or you can request confirmation of the DSUE. It’s wise to keep a copy of the filed Form 706 as documentation of the ported amount.

Q: Can a non-US citizen spouse benefit from portability?
A: Yes, but it’s complicated. The estate must use a QDOT trust for the non-citizen spouse to qualify for marital deduction, and a preliminary DSUE can be ported. The DSUE becomes usable when the spouse becomes a citizen or at their death (after any QDOT taxes are settled).

Q: How much does it cost to file a portability-only Form 706?
A: It varies. Professional fees can range from a couple thousand dollars to more, depending on the complexity of the estate (number of assets, need for appraisals). For a simple estate, the cost is often modest relative to the potential tax savings (which can be hundreds of thousands or millions).

Q: What if the executor refuses to elect portability and I’m the surviving spouse?
A: You may have legal recourse. Courts (as in the Vose case) have compelled executors to elect portability, viewing it as part of their duty to preserve estate assets for beneficiaries. It’s best to communicate and, if needed, seek legal advice promptly – especially before the filing deadline passes.