Quick answer: Portability lets a surviving spouse "inherit" the deceased spouse's unused federal estate tax exemption. In 2024, each person has an $13.61 million exemption. If the first spouse dies using only $3 million, the survivor can claim the remaining $10.61 million — potentially shielding over $27 million combined from estate tax. A Form 706 must be filed within 9 months of death to claim it, even if no estate tax is owed.
Why the Filing Deadline Is Critical
Portability does not happen automatically. The executor must affirmatively elect it by filing IRS Form 706 (United States Estate Tax Return) within 9 months of the deceased spouse's death — or 15 months with an extension. Miss the deadline and the unused exemption is lost forever. Many families skip this filing because the estate is below the taxable threshold and they don't realize an election is required. A surviving spouse who later remarries may also lose the DSUE amount if the new spouse dies before them.
Portability vs. AB Trust Planning
Before portability existed (pre-2011), couples used "AB Trust" or "bypass trust" planning to protect both exemptions. A bypass trust shelters the first spouse's exemption in an irrevocable trust, preventing it from being taxed at the second death. Portability simplified this for many couples — but bypass trusts still offer advantages that portability doesn't:
- The bypassed amount is locked in at the first death's exemption amount — portability uses the exemption in effect at the second death (which could be lower if exemptions decrease)
- Bypass trust assets are protected from the surviving spouse's future creditors
- Bypass trust growth isn't included in the survivor's estate; portability does not shelter post-death appreciation
Who Should File Even Without Estate Tax Due
Any married couple where the combined estate could approach the federal threshold — especially when you factor in future appreciation on ranch land, real estate, or business interests — should seriously consider filing Form 706 at the first death to preserve portability. The filing cost (a few thousand dollars with an estate attorney and CPA) is trivial compared to the estate tax saved. Always consult an estate attorney immediately following a spouse's death to evaluate whether to file.
Questions About Protecting Your Wealth?
Kyle Ellison is a licensed financial professional in TX, CA, NV, MT, UT, NM helping families protect and pass on what they've built.