Estate Tax Portability Election: Capturing Your Deceased Spouse's $15M Exemption
When a spouse dies, their unused federal estate tax exemption doesn't disappear — it can transfer to the surviving spouse through a process called the portability election. Under the 2026 rules, the OBBBA-permanent exemption is $15M per person, meaning a couple with portability can shelter up to $30M from federal estate tax. But only if someone files Form 706. Most surviving spouses don't know this filing is required — even when no estate tax is owed — and quietly forfeit millions in protection.
What is estate tax portability?
Congress added portability to the tax code in 2010 (IRC § 2010(c)) and made it permanent in 2012. The concept: when a spouse dies without having fully used their federal estate and gift tax exemption, the unused portion — called the Deceased Spousal Unused Exclusion (DSUE) — can be transferred to the surviving spouse.1
The surviving spouse's total protection becomes: their own $15M basic exclusion amount plus the DSUE inherited from the deceased spouse, up to a combined $30M.
| Scenario | Without portability election | With portability election |
|---|---|---|
| Deceased spouse had $0 taxable estate | Surviving spouse: $15M protected | Surviving spouse: $30M protected |
| Deceased spouse had $5M taxable estate | Surviving spouse: $15M protected | Surviving spouse: $25M protected |
| Deceased spouse used their full exemption | Surviving spouse: $15M protected | DSUE = $0; no benefit from filing |
The filing trap most families miss
Here is the problem: portability is not automatic. To elect it, the deceased spouse's estate must file a timely federal estate tax return — Form 706 — even if no estate tax is owed and the estate is otherwise below the filing threshold.2
For estates well below $15M, there is no legal filing requirement and no estate tax due. Many families — and even many attorneys — skip the filing. The IRS never sends a notice. The surviving spouse is unaware. The DSUE is silently forfeited.
Portability election deadlines
| Path | Deadline | How |
|---|---|---|
| Standard filing | 9 months after date of death | File Form 706 |
| Automatic extension | 15 months (9 + 6 extension) | File Form 4768 before 9-month deadline |
| Late election relief | Up to 5 years after date of death | Rev. Proc. 2022-32: file Form 706 marked "Filed Pursuant to Rev. Proc. 2022-32" |
Rev. Proc. 2022-32 (effective July 2022) significantly expanded access to late portability elections. Previously, a missed deadline required a costly private letter ruling ($10,000+ in IRS user fees plus attorney time). Now, any estate whose gross estate plus adjusted taxable gifts was below the filing threshold can make the election any time within 5 years of death using the simplified method — no IRS ruling required.3
Practical implication: If a spouse died in 2021 or later and no Form 706 was filed, the window under Rev. Proc. 2022-32 may still be open. This is worth reviewing with an estate attorney before it expires.
DSUE calculator
Estimate how much of the deceased spouse's exemption is available for portability election:
Is portability the right move for your estate?
An HNW estate planning advisor can evaluate whether a portability election, bypass trust, or a combination is optimal for your specific situation — including state estate taxes and GST planning.
Get matched with an estate planning advisor →Portability vs. bypass trust: which is better?
Before the 2010 portability legislation, the bypass trust (also called a credit shelter trust or AB trust) was the only way to double a married couple's federal exemption. The first spouse's assets were split at death: the "B trust" (bypass trust) was funded up to the federal exemption amount, and the "A trust" or outright bequest received the remainder.
Portability simplified this dramatically. For many couples with estates below $30M and no complex state tax, GST, or asset protection goals, portability plus a simple will achieves the same federal tax result with far less planning overhead.
But bypass trusts retain three meaningful advantages over portability alone:
| Factor | Portability alone | Bypass trust |
|---|---|---|
| Federal estate tax | Up to $30M protected (if filed) | Up to $30M protected (automatically) |
| Future appreciation | All growth in surviving spouse's estate | Growth inside bypass trust is estate-tax-free forever |
| GST exemption preservation | GST exemption NOT portable — lost if unused | Bypass trust can be GST-exempt at funding |
| State estate tax | No state benefit (most states) | Can capture state exemption at first death |
| Asset protection | Assets merge into surviving spouse's estate | Trust assets protected from surviving spouse's creditors |
| Administrative complexity | File Form 706 once; simple surviving-spouse management | Ongoing trust administration; separate accounting |
Critical limitation: the GST exemption is NOT portable
This is the most important planning nuance about portability: IRC § 2010(c) only covers the estate and gift tax exemption. The generation-skipping transfer (GST) tax exemption — also $15M per person in 2026 under the OBBBA — is completely separate and has no portability provision.4
If the first spouse dies with an unused GST exemption and no bypass trust was structured to capture it, that exemption is gone. The surviving spouse is left with only their own $15M GST exemption. For a couple with children and grandchildren who intend to use a dynasty trust or generation-skipping trust structure, relying solely on portability sacrifices $15M in potential GST-free transfers.
For HNW families with generational wealth transfer goals, this means the correct structure is typically both: elect portability to capture the estate tax DSUE and fund a bypass trust with the first spouse's GST exemption to preserve the GST exclusion and lock in appreciation outside the taxable estate.
State estate taxes: portability usually does not help
Seventeen states (plus D.C.) impose their own estate taxes. Most do not recognize federal portability. Depending on your state, this matters significantly:
| State | Exemption (2026) | State portability? | Top rate |
|---|---|---|---|
| Massachusetts | $2M | No | 16% |
| Oregon | $1M | No | 16% |
| Washington | ≈$2.2M | No | 20% |
| New York | $7.35M (cliff) | No | 16% |
| Illinois | $4M | No | 16% |
| Minnesota | $3M | No | 16% |
| Hawaii | $5.49M | Yes | 20% |
In states without portability, a bypass trust (funded up to the state exemption at the first spouse's death) is still the primary tool for doubling the state-level protection. For a Massachusetts couple with $6M total estate, a $2M bypass trust at first death reduces the surviving spouse's taxable estate by $2M — saving roughly $200K in Massachusetts estate tax that portability election alone would not capture.
See our HNW estate planning guide for a fuller treatment of state estate tax planning, and our irrevocable trust strategies guide for bypass trust mechanics and alternatives.
The remarriage trap
One underappreciated limitation of portability: the DSUE from a deceased spouse is replaced if the surviving spouse remarries and the new spouse dies first. IRC § 2010(c)(4)(B)(i) allows a surviving spouse to use only the DSUE of their most recently deceased spouse.1 If a widow with $14M DSUE remarries and the new spouse predeceases her with a $0 DSUE, the original $14M DSUE is extinguished — even if the portability election was properly made. Bypass trusts are immune to this risk because the trust assets and GST exemption allocation are fixed at funding.
When to elect portability — the practical answer
For most married couples with combined estates between $5M and $30M and no complicating factors, the portability election on Form 706 is almost always worth doing. The cost (attorney time to prepare a 706) is modest relative to the protection preserved. The downside is essentially zero.
The decision gets more nuanced when:
- The estate needs a state-level bypass trust anyway — in that case, design the bypass trust to also capture GST exemption and let the trust handle the credit shelter function; portability becomes secondary
- The couple's combined estate is very likely to remain below $15M — portability may not change outcomes, but the filing is still cheap insurance given future growth uncertainty
- Assets are illiquid or estate is still being administered — the 6-month extension and Rev. Proc. 2022-32 provide flexibility, but the election should not be left to chance
Frequently asked questions
What is estate tax portability and how does DSUE work?
Estate tax portability lets a surviving spouse inherit the deceased spouse's unused federal exemption — called the Deceased Spousal Unused Exclusion (DSUE). The 2026 exemption is $15M per person (OBBBA permanent), so with portability a couple can shield up to $30M from federal estate tax. The DSUE is added to the surviving spouse's own $15M basic exclusion amount, giving them a combined applicable exclusion of up to $30M. Portability is not automatic — it requires filing Form 706.
Do I have to file Form 706 even if no estate tax is owed?
Yes. This is the most commonly forfeited estate planning benefit. If no estate tax is owed and the estate is below the filing threshold, there is no independent obligation to file — but the portability election can only be made on a timely-filed Form 706. Skip the filing, and the DSUE is gone permanently. For any couple whose combined estate might ever exceed $15M — accounting for portfolio growth, future inheritance, or business appreciation — the Form 706 is worth filing even when no tax is currently owed.
What is the deadline to make the portability election?
Standard: 9 months from date of death. With automatic extension (Form 4768): 15 months. Missed the deadline? Revenue Procedure 2022-32 allows a late election via a simplified method — file Form 706 within 5 years of death with the notation that it is filed pursuant to Rev. Proc. 2022-32. No private letter ruling required. The 5-year window is available as long as the estate was below the filing threshold at the time of death.
Is the GST exemption portable?
No. The $15M generation-skipping transfer exemption is entirely separate and has no portability provision. It cannot be transferred to a surviving spouse. A deceased spouse's unused GST exemption is permanently forfeited if not used. For families with multi-generational wealth transfer goals — grandchildren, dynasty trusts — this means portability alone is insufficient. A credit shelter trust funded with the first spouse's GST exemption at death preserves it while also locking in appreciation outside the taxable estate. See our generation-skipping trust guide.
Does portability work for state estate taxes?
Generally no. Most of the 17 states (plus D.C.) with estate taxes do not recognize federal portability. Hawaii is the notable exception. In states like Massachusetts ($2M exemption), Oregon ($1M), Washington, New York, Illinois, and Minnesota, portability cannot double the state exemption — only a bypass trust can. For residents of these states, bypass trust planning remains essential even when a federal portability election is also made.
Get matched with an HNW estate planning advisor
Whether you need to evaluate a portability election, design a bypass trust strategy, or coordinate state and GST exemption planning for a $5M–$50M estate, the advisors in our network specialize in exactly this. Fee-only, no commissions.
Sources
- IRS: Frequently Asked Questions on Estate Taxes — portability election mechanics, DSUE definition, most-recently-deceased-spouse rule under IRC § 2010(c)(4)(B)(i). Verified August 2026.
- IRS Instructions for Form 706 (September 2025) — filing requirements for portability election; 2026 basic exclusion amount $15,000,000 (P.L. 119-21, OBBBA); 9-month deadline; Form 4768 extension procedure.
- IRS Revenue Procedure 2022-32 — simplified method for late portability election up to 5 years after date of death without private letter ruling; Form 706 notation requirement.
- Charles Schwab: How Portability Helps Couples Reduce Estate Taxes — portability vs. bypass trust comparison; GST exemption non-portability explanation; state estate tax considerations. Cross-checked against IRS Form 706 instructions and Kitces.com analysis.
Estate tax values verified against IRS Form 706 Instructions (Rev. September 2025) and P.L. 119-21 (OBBBA, July 2025): 2026 federal estate/gift/GST exemption $15,000,000 per person, permanent. State exemption figures from published state revenue department guidance as of mid-2026. State exemptions subject to legislative change.