The Counterintuitive Part Most People Miss
Most families assume that if an estate is well below the federal estate tax exemption, there’s no reason to file an estate tax return. For a surviving spouse, that assumption can be a costly mistake. Portability, the ability to carry over a deceased spouse’s unused exemption, only happens if the estate files Form 706 and affirmatively elects it, even when no tax is actually owed.
What Portability Actually Does
Every individual has a federal estate and gift tax exemption, an amount they can pass on, during life or at death, without triggering federal estate or gift tax. When a married person dies without using their full exemption, portability allows the surviving spouse to add the deceased spouse’s unused exemption amount (called the “DSUE” — Deceased Spousal Unused Exclusion) to their own, effectively doubling the exemption available to the surviving spouse’s estate later on.
Why This Matters Even for Modest Estates
Many families reasonably assume portability doesn’t apply to them, since their estate is far below the exemption threshold. But circumstances change:
- Asset values can grow significantly between the first spouse’s death and the survivor’s death, especially with real estate, business interests, or investments
- The federal exemption itself could be reduced by future legislation, meaning an estate that’s comfortably below the threshold today might not be in the future
- A surviving spouse may remarry, and their own DSUE from a first marriage can be lost if not properly preserved and used
Filing for portability is a way of protecting future flexibility, even when it looks unnecessary today.
The Catch: You Have to File to Get It, and There’s a Deadline
Portability is not automatic. It requires filing a federal estate tax return (Form 706) for the deceased spouse’s estate, even if no tax is due, and making an affirmative portability election on that return.
If the return isn’t filed within the required window, the unused exemption is generally lost, permanently, in most cases.
What Portability Doesn’t Do
- It doesn’t apply to the generation-skipping transfer (GST) tax exemption — that exemption is not portable between spouses the way the estate/gift tax exemption is.
- It doesn’t apply if the surviving spouse remarries and the new spouse also predeceases them — only the most recently deceased spouse’s DSUE is generally available, so a surviving spouse who remarries can potentially lose an earlier DSUE if the new marriage also ends in widowhood without proper planning.
- It isn’t a substitute for a well-drafted estate plan — portability protects the exemption amount, but doesn’t address other planning goals like asset protection, incapacity planning, or control over distributions the way a trust-based plan can.
Frequently Asked Questions
Q: Do we need to file Form 706 if our estate is well under the exemption amount?
If you want to preserve portability for the surviving spouse, yes, filing (and electing portability) is required regardless of whether any tax is actually owed.
Q: Is there a deadline for filing to claim portability?
Yes, and it’s a hard deadline in most circumstances, though late-election relief has been available in some cases, this is worth confirming with an attorney promptly after a death, rather than assuming there’s no rush since no tax is owed.
Q: What happens if we miss the filing deadline?
In most cases, the unused exemption is lost, and the surviving spouse cannot claim it later, even if extenuating circumstances explain the delay. Some relief procedures exist for missed deadlines, but they shouldn’t be relied upon as a backup plan.
Q: Does portability replace the need for estate planning if our estate is modest?
No, portability is a valuable tax-preservation tool, but it doesn’t address probate avoidance, asset protection, or how and when beneficiaries receive assets. A complete estate plan generally still matters regardless of portability.
Q: If my spouse already passed away and we didn’t file a 706, is it too late?
Not necessarily; this depends on how much time has passed and what relief may be available. This is worth an urgent conversation with an estate planning attorney rather than assuming the opportunity is gone.
Recently Lost a Spouse? The Portability Clock Is Already Running
Even in the middle of a difficult time, this is worth addressing promptly because the filing window for portability doesn’t pause for grief, and missing it can mean a permanent financial loss for the surviving spouse’s future estate.
At SJF Law Group, we help Florida families understand whether portability applies to their situation and make sure that deadline isn’t missed. Contact us if you’ve recently lost a spouse or want to plan ahead before the moment ever comes.
