Portability in estate planning is a federal tax rule that lets a surviving spouse inherit whatever portion of the federal estate and gift tax exclusion their deceased spouse did not use, effectively combining both spouses’ exclusions into one larger shield. For deaths in 2026, each individual has a $15 million exclusion, so a married couple using portability can protect up to $30 million from federal estate tax.1Internal Revenue Service. What’s New — Estate and Gift Tax The catch is that portability is not automatic. The executor of the first spouse to die must file a federal estate tax return to claim it, even when no tax is owed.
How the Unused Exclusion Transfers
Every person has a federal estate and gift tax exclusion, which is the total amount they can give away during life or leave at death before federal tax kicks in. When the first spouse dies without using all of that exclusion, the leftover piece is called the Deceased Spousal Unused Exclusion, or DSUE. Portability lets the surviving spouse add the DSUE to their own exclusion.2Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
A concrete example makes this easier. Say the first spouse dies in 2026 having used $6 million of the exclusion on lifetime gifts. That leaves $9 million unused out of the $15 million. The surviving spouse claims the $9 million DSUE and adds it to their own $15 million, giving them a combined applicable exclusion of $24 million.2Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
Portability became available for deaths after December 31, 2010.3Internal Revenue Service. Estate Tax Before then, the standard way to preserve both spouses’ exclusions was a bypass trust, which carried setup and administration costs. Portability gave couples a simpler path to the same combined shield.
The 2026 Exclusion Amount
The federal estate and gift tax exclusion for 2026 is $15 million per person. That figure comes from the One, Big, Beautiful Bill Act, signed into law on July 4, 2025, which raised the basic exclusion amount and made it permanent instead of letting it sunset.1Internal Revenue Service. What’s New — Estate and Gift Tax Beginning in 2027, the $15 million amount will be adjusted annually for inflation.2Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
Doubling that number through portability only works if the surviving spouse actually makes the election after the first death. Skip the filing and the unused exclusion disappears.
Electing Portability on Form 706
Portability is claimed on Form 706, the federal estate tax return. The executor of the deceased spouse’s estate must file the return and complete the portability section, even if the estate is far too small to owe any estate tax and would otherwise have no filing obligation.4Internal Revenue Service. Instructions for Form 706 This is the most common portability mistake: assuming the DSUE transfers automatically. It does not.
Form 706 is normally due within nine months of the date of death. The executor can get an automatic six-month extension by filing Form 4768 before the nine-month deadline passes.4Internal Revenue Service. Instructions for Form 706 No separate election form or letter is required; completing the portability section of Form 706 is enough.5Internal Revenue Service. Form 706 (Rev. August 2025) United States Estate (and Generation-Skipping Transfer) Tax Return
Late Filing Relief Within Five Years
If the executor missed the deadline and the estate was not otherwise required to file (because the gross estate plus adjusted taxable gifts came in under the exclusion amount), there is a simplified relief option. Under Revenue Procedure 2022-32, the executor can file Form 706 up to five years after the date of death to elect portability. The return must carry a statement at the top reading: “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”6Internal Revenue Service. Revenue Procedure 2022-32
The five-year window applies only to estates that had no independent filing requirement. If the estate was large enough that a return was required anyway, the standard nine-month deadline (plus the six-month extension, if requested in time) is the hard cutoff. After that, the only option is a private letter ruling from the IRS, which is expensive and uncertain.
What Filing Costs
Preparing Form 706 is detailed work even when no tax is due. Professional fees for a portability-only return typically run between $1,500 and $3,500, depending on the complexity of the estate and the preparer. Weigh that against the federal estate tax rate of 40% applied to whatever exclusion the surviving spouse forfeits by skipping the election. The math usually favors filing.
Who Can Use Portability
A few eligibility rules narrow who can rely on portability.
- The deceased spouse must have been a U.S. citizen or resident at death.3Internal Revenue Service. Estate Tax
- The surviving spouse claiming the DSUE must generally be a U.S. citizen. A non-citizen surviving spouse normally cannot use the DSUE directly.
- Only the DSUE from the most recently deceased spouse counts. If the surviving spouse remarries and that spouse later dies, the DSUE resets to whatever the newest deceased spouse left unused, no matter how large the earlier DSUE was.2Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
When the Surviving Spouse Is Not a U.S. Citizen
Portability generally is not available when the surviving spouse is not a U.S. citizen, and the unlimited marital deduction does not apply either. The workaround is a Qualified Domestic Trust (QDOT), which allows the estate to claim the marital deduction and defer, rather than eliminate, estate tax on assets left to a non-citizen spouse. Tax is triggered when principal is distributed from the trust or when the surviving spouse dies. A QDOT must be established under U.S. law, must have at least one trustee that is a U.S. citizen or U.S. corporation, and must give the trustee the right to withhold tax on distributions. Couples in this situation need specialized estate planning advice well before the first death.
What Portability Does Well
The main attraction is simplicity. The old approach for wealthy couples was a bypass trust in each spouse’s plan, funded correctly at the first death and administered for years afterward. Portability lets many couples skip the trust and still protect the same combined exclusion.
A Second Step-Up in Basis
Portability also delivers a capital gains benefit that most bypass trusts cannot. When assets pass outright to the surviving spouse at the first death, they get a step-up in basis to fair market value on the date of death. Because the surviving spouse now owns those assets personally, when the surviving spouse later dies the same assets get a second step-up. Heirs who sell afterward may owe little or no capital gains tax.
Assets held inside a bypass trust usually get the step-up at the first death only. The trust owns them at the second death, not the surviving spouse, so there is no second basis adjustment. For highly appreciated real estate or long-held stock, that difference can be worth hundreds of thousands of dollars.
Lifetime Gifts Count Too
The DSUE is not reserved for use at death. The surviving spouse can tap the inherited exclusion to make tax-free lifetime gifts to children, grandchildren, or anyone else. That gives the surviving spouse room to do their own estate planning instead of waiting for the exclusion to matter at death.
Where Portability Falls Short
Portability works well as a default, but it has real limits.
The DSUE Is Frozen
Once calculated, the DSUE is locked in at the amount determined using the exclusion in effect the year the first spouse died. The surviving spouse’s own exclusion keeps rising with inflation. The DSUE does not.7National Archives. Portability of a Deceased Spousal Unused Exclusion Amount Over a long gap between deaths, inflation can meaningfully shrink the real value of the DSUE. A bypass trust can be invested and grow in value outside the surviving spouse’s estate.
The GST Exemption Is Not Portable
The generation-skipping transfer (GST) tax applies when wealth moves to grandchildren or more remote descendants, and it has its own separate exemption. That exemption is not portable. If the first spouse dies without using the GST exemption, it is lost. Families planning for multiple generations need to allocate GST exemption through trusts rather than rely on portability.
No Protection From Creditors or Remarriage
Assets that pass outright to the surviving spouse become the surviving spouse’s property. They are exposed to creditors, lawsuits, and the financial consequences of a future marriage. A bypass trust can be drafted to keep assets insulated from the surviving spouse’s creditors and outside the reach of a later spouse’s divorce claims.
State Estate Taxes Usually Ignore Portability
More than a dozen states and the District of Columbia impose their own estate or inheritance taxes, often with exemption amounts far below the federal $15 million. These state taxes generally do not recognize portability. A surviving spouse could owe zero federal estate tax and still face a state bill. Couples in those states need state-level planning, often through trusts, in addition to the federal election.
Portability or a Bypass Trust
Portability and bypass trusts are not an either/or choice, and many families use both. The tradeoffs break down as follows:
- Simplicity favors portability. One tax return beats drafting, funding, and administering a trust for decades.
- Capital gains treatment favors portability, because of the second step-up at the surviving spouse’s death.
- Creditor protection favors a bypass trust, which can shield assets from the surviving spouse’s creditors and future spouses.
- GST planning favors a bypass trust, since the GST exemption can be allocated to the trust but cannot ride along with portability.
- Keeping appreciation outside the taxable estate favors a bypass trust. Under portability, growth happens inside the surviving spouse’s estate.
- Inflation protection favors a bypass trust, because the DSUE amount does not grow.
Couples whose combined estate sits comfortably below the exclusion often do fine with portability alone. Couples closer to the exclusion line, or those with GST planning needs, creditor concerns, or assets likely to appreciate sharply, usually benefit from adding a bypass trust to the plan. An estate planning attorney can match the right combination to the family’s situation. Even when no trust is involved, the executor of a married decedent’s estate should talk through the portability election with a tax professional before the nine-month clock runs out. Filing a return the family does not immediately need is almost always cheaper than losing exclusion the surviving spouse will.