This article is part of our ongoing series on the basics of estate planning. One of the most important yet often overlooked concepts in this area is portability. If you are married, portability can be a powerful tool to help maximize your family’s estate tax exclusion, but only if you know how and when to use it.
What Is Portability?
Portability allows a surviving spouse to use the deceased spouse’s unused federal estate and gift tax exclusion. In plain terms, if one spouse passes away without using their full estate tax exemption, the surviving spouse can “port” (or carry over) that unused amount and add it to their own.
This rule first became part of federal tax law in late 2010, and the American Taxpayer Relief Act of 2012 made it permanent (Pub. L. No. 112-240). Today, it remains one of the most valuable planning tools available to married couples.
Why Does Portability Matter?
The federal estate tax exemption is significant but not unlimited. For example, in 2017 the exclusion amount was $5.49 million per person (IRS Rev. Proc. 2016-55). In 2025, it is set to drop back to pre-2018 levels (adjusted for inflation) unless Congress acts. Without portability, any unused exclusion from the first spouse to die would be lost forever.
With portability, however:
- The surviving spouse preserves the deceased spouse’s unused exclusion amount (DSUEA).
- This effectively doubles the amount that can be shielded from estate taxes for the couple.
- Families may avoid paying significant federal estate taxes when wealth transfers to children or other heirs.
"From a litigation standpoint, portability elections create a paper trail that protects families. When I'm defending an estate against IRS challenges, having that Form 706 on file, even for a modest estate, gives us solid ground to stand on." says Oleg Cross, trial lawyer at Stonebridge Law APC.”
How Do You Elect Portability?
Portability is not automatic. The executor of the deceased spouse’s estate must file a federal estate tax return, IRS Form 706, to make the election.
- Even if the estate is well below the exemption threshold, filing Form 706 is the only way to preserve portability.
- The return must be filed within nine months of death (or up to 15 months with an extension).
- According to Treasury Regulations (Treas. Reg. § 20.2010-2), when filing solely to elect portability, the executor may estimate the value of assets passing to the surviving spouse or charity in good faith, instead of requiring costly appraisals.
Can the IRS Re-Examine the Election?
Normally, once the statute of limitations runs (three years after the estate tax return is filed), the IRS cannot reopen the return. However, in the case of portability, the IRS retains the right to review the calculation of the DSUEA at any time (I.R.C. § 2010(c)(5)(B)).
This means that while the election secures the benefit for the surviving spouse, the IRS can still later adjust the amount of exclusion that was ported over.
When Is Portability the Right Choice?
Filing an estate tax return just to elect portability can feel like an unnecessary step, especially if the estate is modest. However, there are good reasons to consider it:
- Future growth: Assets that appreciate may push a surviving spouse’s estate into taxable territory years later.
- Tax law changes: Exemption amounts are scheduled to decrease in 2026, which could expose more estates to taxation.
- Flexibility for heirs: Portability provides peace of mind and options for future estate planning.
Key Takeaways
- Portability allows a surviving spouse to preserve and use the deceased spouse’s unused estate tax exemption.
- The election is made by filing IRS Form 706, even if no estate tax is due.
- Filing ensures flexibility for future planning and may save heirs significant tax liability.
- IRS rules allow simplified reporting if the return is filed only for portability purposes.
Final Thoughts
While portability is a powerful tool, it is not always the best solution. In some cases, leaving assets in a trust for the surviving spouse can provide greater tax efficiency, creditor protection, and control. Every family’s situation is different, so it’s important to consult with an experienced estate attorney to determine the right strategy for your needs.
References
Internal Revenue Code § 2010(c)(5)(B)
Treasury Regulations § 20.2010-2
IRS Form 706 Instructions: Estate and Generation-Skipping Transfer Tax Return
American Taxpayer Relief Act of 2012, Pub. L. No. 112-240
