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Portability can look simple: one spouse dies, and the surviving spouse may be able to use the federal estate and gift tax exclusion the first spouse did not use.
The benefit is not automatic, and the filing rules matter even when the deceased spouse’s estate would not otherwise need to file an estate tax return. For 2026, the federal basic exclusion amount is $15 million per individual, making portability a potentially significant planning tool for married couples.
Portability allows a surviving spouse to add a deceased spouse’s unused federal estate and gift tax exclusion to the survivor’s own exclusion. Congress created the rule in 2010 for estates of decedents dying after December 31, 2010, then made it permanent in 2013. Before portability, married couples often needed a credit shelter or bypass trust to preserve both spouses’ exemptions. A valid portability election can preserve the Deceased Spouse Unused Exemption (DSUE) without requiring those assets to remain in a separate trust. For 2026, the federal basic exclusion amount is $15 million per individual, according to current IRS guidance for estates.
The executor calculates the deceased spouse’s DSUE amount on Form 706. In simplified terms, DSUE is the portion of the deceased spouse’s applicable exclusion that was not consumed by taxable lifetime gifts or transfers at death. Once elected, that amount becomes available to the surviving spouse for later taxable gifts or transfers at death. The surviving spouse generally uses DSUE before using his or her own basic exclusion. This can make Gift Tax planning flexible during the survivor’s lifetime. For a DSUE estate tax analysis, the amount transferred depends on the deceased spouse’s return, not the survivor’s future exemption amount.
The election is generally made by timely filing a complete Form 706 for the deceased spouse. Form 706 is due nine months after death, and Form 4768 can provide an automatic six-month filing extension. A separate affirmative election is generally unnecessary because a timely, complete return elects portability unless the estate opts out. Revenue Procedure 2022-32, effective July 8, 2022, gives certain estates that were not otherwise required to file Form 706 up to five years after death to obtain simplified late-election relief. That expanded form 706 portability window can prevent an otherwise costly lost opportunity for the surviving spouse.
Portability is useful, but it does not solve every transfer-tax problem. DSUE does not carry over the deceased spouse’s generation-skipping transfer tax exemption, and it generally does not shield post-death appreciation from the surviving spouse’s taxable estate. State estate or inheritance tax systems may follow different rules. Another risk involves remarriage: the usable DSUE is tied to the survivor’s “last deceased spouse,” so a later spouse’s death can replace the amount. Portability also provides no built-in creditor protection, remarriage protection, or controls over ultimate beneficiaries. Those gaps are why Trusts Accounting and estate planning should be coordinated, not treated separately.
Portability may be sufficient when a married couple has a straightforward estate, expects assets to remain within applicable transfer-tax exemptions, wants the surviving spouse to retain control, and values the potential for a basis adjustment on property included in the survivor’s estate at death. Trust planning may become more attractive when the estate includes rapidly appreciating assets, children from prior marriages, creditor concerns, generation-skipping goals, or state estate-tax exposure. A credit shelter trust can keep future appreciation outside the surviving spouse’s taxable estate while providing distribution controls and, depending on the trust and state law, asset-protection benefits. In many plans, the best answer is not portability or trusts, but both, coordinated around family goals and tax considerations.
For more than four decades, Bennett Thrasher has provided businesses and individuals with strategic business guidance and solutions through professional tax, audit, advisory, and business process outsourcing services. Contact Jonathan Swartz, partner in Bennett Thrasher’s Trusts & Estates Planning, or call us at 770.396.2200.
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