Jan 29, 2026 Portability Elections Must Be Timely and Complete to Preserve Access to DSUE
Claiming your deceased spousal unused exemption
When one spouse passes away, the surviving spouse may have access to their deceased spouse’s unused federal estate tax exemption. Known as the deceased spousal unused exemption (DSUE), this benefit can potentially save the surviving spouse hundreds of thousands of dollars in federal estate taxes. However, to take advantage of this valuable tax benefit, the executor of the deceased spouse’s estate must affirmatively act in a timely manner. Failing to do so can lead to permanently losing the tax savings.
What is the deceased spousal unused exemption (DSUE)?
The value of someone’s estate at the time of their death determines whether they owe a federal estate tax and in what amount. The tax is imposed on estates that exceed fifteen million dollars in 2026. Therefore, a couple’s combined estate tax exemption for 2026 is thirty million dollars.
If one spouse dies with an estate assessed at a value lower than the exemption amount, the surviving spouse is entitled to add that unused exemption amount to their own estate tax exemption at the time of their death. This is referred to as making the deceased spouse’s unused exemption (DSUE) portable. Portability elections are a critical component of comprehensive federal estate tax planning, particularly for married couples with significant assets or complex family circumstances.
The portability provisions of the US tax law require the executor/administrator of the deceased spouse’s estate to affirmatively file a notice (IRS Form 706) declaring the surviving spouse’s election to exercise the portability option. The portability benefit is not automatic in estates valued under the estate tax filing threshold.
Importantly, those who wish to exercise the portability option would not otherwise be required to file a federal estate tax return. Only those estates that exceed the value of the exemption must file a return. However, if you intend to claim the portability benefit of the DSUE, a full estate tax return must be filed.
Why does the correct portability election matter?
While the IRS has eased some formal mandates applying to estates not otherwise required to file a return, the government continues to review each portability election with strict scrutiny. The consequence of missing filing deadlines or omitting required documents can be extremely expensive.
Suppose a spouse passes away with an estate valued at $10 million, a full $5 million below the 2026 estate tax exemption amount. The executor of the estate might not file an estate tax return due to the estate’s lower value. What happens if the surviving spouse dies with an estate valued at $20 million, exceeding their individual exemption by more than $4 million. Without the benefit of their deceased spouse’s $5 million unused exemption, the last to die spouse’s estate tax bill could exceed $1.5 million. These outcomes often arise when executors are unaware that a Form 706 portability election must be filed even when the estate itself falls below the federal filing threshold.
At Ely J. Rosenzveig & Associates, we ensure every client understands how portability affects their comprehensive estate planning strategy. Taking steps to preserve this valuable benefit for our clients is part of our daily practice.
Portability of DSUE in estates exceeding the exemption.
A key point to remember is that estates in which the total assets exceed the exemption amount may still have unused exemption available for portability. The US tax code provides for an unlimited marital deduction when the deceased spouse transfers assets to their surviving spouse. Assume the gross estate value were $30 million and the decedent’s will bequeathed $20 million to the surviving spouse. The estate’s value for DSUE portability purposes would be only $10 million, leaving $5 million in unused exemption available, applying the 2026 exemption level.
Because the value of the gross estate exceeds the filing requirement threshold, the estate must file a Form 706 return. However, the DSUE is calculated based on the taxable estate after deductions.
How to make a valid portability election
To effectively make a portability election, the personal representative or executor of the deceased spouse’s estate must file a complete federal estate tax return within the required period, often with the guidance of experienced estate administration attorneys. The tax filing must be completed even though the decedent’s estate is not required to file the return because it’s value is below the exemption amount.
If the estate value exceeds the federal estate tax filing threshold, the tax return must be filed within nine months of the decedent’s death. An automatic six-month extension can be granted if the estate’s representative files a formal request (IRS Form 4768) before the nine months lapse.
In 2022, the IRS loosened the filing deadline for estates valued below the filing threshold that only file a federal return to elect portability. The procedure (Rev. Proc. 2022-32) permits these estates to file the Form 706 return up to five years after the decedent’s death. The estate representative filing the return must clearly print “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)” at the top of the form.
Filing alone does not make portability election complete.
While filing a federal estate tax return is required to elect portability, filing alone is not enough. To comply with the IRS portability election requirements, the return must be “complete.” That means all the documents necessary to identify and support the claimed values must be submitted, even if the estate is under the filing threshold.
This requirement may seem unnecessarily burdensome for estates that are only filing to elect portability and are not otherwise required to file a return. In these cases, the IRS will typically accept estimated values for certain assets without formal appraisals as long as the estimates are reasonable and made in good faith. All assets must still be identified and valued.
Despite the IRS easing some formalities, the process of electing portability remains complex enough to seek assistance from experienced attorneys who regularly handle estate tax issues. Ely J. Rosenzveig & Associates has years of such experience, guiding clients through the Form 706 filing process to ensure their portability election meets all IRS requirements.
Portability and remarriage
If you elected portability of your deceased spouse’s unused exemption (DSUE) and you are thinking about remarrying, you need to consult with a tax advisor first. If you remarry and your second spouse predeceases you, you lose the DSUE from your previous spouse. This issue deserves attention, especially if your first spouse’s DSUE is substantial.
To receive the benefit of that earlier portability election, you should consider accelerating some wealth transfers before remarrying. These decisions require timely advice from experienced tax advisors.
Note: New York does not allow portability of state exemptions
We focus only on the federal estate tax exemption and portability election process in this article. New York residents need to remember that the State of New York does not allow a similar process for the portability of spousal estate tax exemptions. Instead, each spouse has only an individual estate tax exemption of $7.35 million for 2026. The New York rule is use it or lose it.
This approach has led many New Yorkers to implement other estate planning strategies, such as credit shelter trusts and Medicaid Asset Protection Trusts (MAPTs), to preserve assets while planning for long-term care needs.
Why work with Ely J. Rosenzveig & Associates?
Portability elections involve complex procedures related to federal tax law. Working with professional estate planning professionals with years of tax advocacy experience means your comprehensive estate plan is designed to meet your individual goals and preserve your wealth while minimizing taxes.
At Ely J. Rosenzveig & Associates, we have been assisting executors and surviving spouses with portability elections for many years. We evaluate each client’s individual situation to determine whether electing portability makes sense, prepare all required tax forms, and ensure that all IRS requirements are met. Our firm routinely advises executors and surviving spouses on portability elections as part of a broader estate tax planning strategy in New York.
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