Portability: Why Surviving Spouses Should File Form 706 Even With No Tax Due

Key takeaways

Portability lets a surviving spouse add the deceased spouse's unused exemption to their own, up to $30 million combined in 2026, but only through a timely filed Form 706.
An estate below the filing threshold has no obligation to file, so the election is easy to miss; the cost of missing it is up to 40% of the unused amount.
Revenue Procedure 2022-32 allows a late portability-only return up to five years after death for estates that weren't otherwise required to file.
The survivor's exemption grows with inflation but the ported amount doesn't, and remarriage can change which spouse's unused exemption applies.

When a spouse dies with an estate well below the exemption, the family's attorney often says, correctly, that no estate tax return is required. What sometimes goes unsaid is that filing one anyway preserves the deceased spouse's unused exemption for the survivor, and that without the filing, it's gone. With the exemption at $15 million per person and made permanent, fewer families will ever need it. But the ones who will are the ones with growing assets and a surviving spouse who may live another twenty years. For them, skipping a return that would have cost a few thousand dollars can cost millions.

What portability is

Each person has a basic exclusion amount, $15 million in 2026, that shelters transfers from estate and gift tax. Since 2011, the portion a deceased spouse didn't use (the deceased spousal unused exclusion, or DSUE) can be transferred to the surviving spouse, who then has their own exemption plus the DSUE. A couple can shelter $30 million combined without any trust planning, provided the election is made.

The election is made on a complete and timely filed Form 706 for the deceased spouse, due nine months after death with a six-month extension available. There's no separate form. Filing the return without opting out is the election.

Why it gets missed

An estate has to file Form 706 only if the gross estate plus adjusted taxable gifts exceeds the exemption. Most don't, so most families are told no return is required. The portability election means filing a return that's otherwise unnecessary, prepared by someone who charges for it, for a benefit that may never be used. Families in grief, with an estate that seems modest, decline. Ten years later the survivor's estate has grown past $15 million and the DSUE is gone.

When to file

Always, if the combined estate could plausibly reach the survivor's exemption. A couple with $8 million today, a surviving spouse of 65, and a portfolio growing 5% a year has $21 million at 85. At that point the ported exemption is worth up to $6 million of estate tax.

Usually, if there's any meaningful estate at all. A portability-only return is modest in cost, in the low thousands for a simple estate, and it can use simplified valuation for assets that qualify for the marital or charitable deduction. Against a potential 40% tax on the unused amount, filing is an easy call for any family whose survivor has more than a couple of million dollars.

Regardless of the survivor's own plans. The DSUE can be used for lifetime gifts as well as at death, and it gets used first, before the survivor's own exemption, which preserves the survivor's inflation-indexed amount.

The late election

Revenue Procedure 2022-32 provides a simplified method for estates that weren't required to file: a Form 706 filed on or before the fifth anniversary of death, with a statement at the top that it's filed under the procedure, makes the election without a private letter ruling. This has rescued a lot of families who learned about portability after the deadline. Beyond five years, a private letter ruling request is the only route, and it's expensive and uncertain.

So if a spouse died in the past five years and no return was filed, the election is still available. It's one of the first things we ask a widowed client.

The details that matter

The ported amount is frozen. The survivor's own exemption is indexed for inflation; the DSUE is fixed at the amount unused at the first death. Using it first for gifts, while the survivor's own exemption keeps growing, is usually the right order.

Remarriage. A survivor who remarries and is then widowed again may use only the DSUE of the most recent deceased spouse. The DSUE from the first spouse can be locked in by making gifts that use it before the second marriage ends.

Non-citizen spouses. Portability is available only to a surviving spouse who is a U.S. citizen or resident, and assets passing to a non-citizen spouse don't qualify for the marital deduction without a qualified domestic trust, which changes the math.

Statute of limitations. The IRS can examine the first spouse's return to adjust the DSUE at any time, even after the normal limitations period, when the survivor's estate uses it. Good records of the first estate's values matter for decades. Nobody enjoys keeping them. Keep them anyway.

State estate taxes. Florida has none. Survivors who move to a state with its own estate tax (New York, Massachusetts, and others) may find the state doesn't recognize portability, which is a reason for trust planning in those states and not in Florida.

Portability versus a bypass trust

Before portability, couples used a credit shelter or bypass trust at the first death to use the first spouse's exemption. Portability makes that unnecessary for tax purposes in most estates, and an outright transfer to the spouse has real advantages: simplicity, and a second step-up in basis at the survivor's death for the assets that passed outright. A bypass trust still makes sense for very large estates (its growth is outside the survivor's estate, while the DSUE is frozen), for blended families where control of the remainder matters, and for asset protection. Our post on the estate tax exemption covers which families are in which group.

If this is you

When a client is widowed, the portability decision is on the checklist for the first meeting: the size of the estate, the survivor's projection, the deadline, and the cost of the return. In nearly every case with meaningful assets, we recommend filing, and we work with the estate attorney or CPA who prepares it. For clients whose spouse died within the past five years, we check whether the election was made and, if not, arrange the late filing. It's a small item in estate planning that occasionally matters more than everything else combined.

Frequently asked questions

What does a portability-only return cost?

For a simple estate using the simplified valuation rules, typically a few thousand dollars in professional fees. Complex estates with businesses or real estate cost more because the assets still have to be listed, though not fully appraised if they pass to the spouse.

Can the executor decline to file?

The executor controls the election. In a blended family, an executor who is a child of the first marriage may have no interest in preserving the stepparent's exemption. The will or a marital agreement can require the election.

Is the DSUE available for gift tax?

Yes. The survivor can use the DSUE for lifetime gifts, and it applies before the survivor's own exemption.

We have a joint trust. Do we still need to file?

Yes. Portability is an election on a tax return, not a trust provision. A trust that divides at the first death may use the exemption directly, but the election on the return is what preserves any unused portion.

Joseph G. Valerio, CFP®, EAFounder and Lead Advisor at Valerio Wealth Management, a fee-only, fiduciary virtual family office in Miami, Florida. One advisor, credentialed in both financial planning and federal tax. About Joseph

This article is general education, not individualized advice, and it is not tax, legal, or accounting advice. Figures reflect federal law for the year stated and can change. Valerio Wealth Management does not prepare or file tax returns. Speak with a qualified professional about your own situation before acting.