What is the portability election, and how do I make it?

What it is

When a married person dies without using all of his or her basic exclusion amount, the unused part, the DSUE amount, can transfer to the surviving spouse. The survivor can use it for lifetime gifts or at death, in addition to his or her own exclusion.

Portability is a backup to, or substitute for, credit shelter trust planning. Unlike a credit shelter trust, it does not shelter growth after the first death, and it does not carry over GST exemption.

The election can matter even when the first spouse's estate is modest. A surviving spouse's assets can grow, can be increased by an inheritance, or can be affected by future changes in the law. The DSUE amount stays fixed, which makes it a predictable cushion.

What the law says

IRC §2010(c)(2) defines the applicable exclusion amount as the sum of the basic exclusion amount and, for a surviving spouse, the DSUE amount. Under §2010(c)(5)(A), the DSUE amount may not be used unless the executor of the deceased spouse's estate files an estate tax return that computes it and makes the election. Section 2010(c)(5)(B) allows the IRS to examine the deceased spouse's return to determine the DSUE amount without regard to the normal limitations period.

Treas. Reg. §20.2010-2 provides the election rules, including a simplified valuation method for property passing to the spouse or charity when the estate is not otherwise required to file. Rev. Proc. 2022-32 gives estates that were not required to file under §6018(a) a simplified method to elect portability on or before the fifth anniversary of the decedent's death.

Requirements and tests

• The decedent died after 2010 and was survived by a spouse.
• The executor files a complete and properly prepared Form 706, generally due nine months after death, extendable six months with Form 4768.
• If the estate was not required to file, a late election may be made under Rev. Proc. 2022-32 by the fifth anniversary of death, with the required statement at the top of the Form 706.
• The DSUE amount is the lesser of the deceased spouse's basic exclusion amount or the excess of the deceased spouse's applicable exclusion over the tax base.
• The survivor uses the DSUE of the last deceased spouse only.
• Only the estate tax and gift tax exclusion is portable; GST exemption is not.

How it works

The executor files Form 706, computes the DSUE on Part 6, and does not opt out. The survivor then applies the DSUE first to lifetime taxable gifts and then at death. The survivor's own basic exclusion amount is indexed for inflation after 2026; the DSUE amount is fixed at the first death.

Estates that are not otherwise required to file can use the simplified valuation rules in Treas. Reg. §20.2010-2(a)(7)(ii) for property passing to the surviving spouse or to charity, reporting a good-faith estimate of value rather than a full appraisal. The return must still be complete in every other respect.

A surviving spouse who makes taxable gifts after the first death uses the DSUE amount before his or her own basic exclusion amount. That ordering rule can help a survivor who remarries, because DSUE already applied to gifts is not lost if a later spouse dies.

Risks and IRS scrutiny

Common problems are not filing because no tax was due, filing an incomplete return, missing the five-year deadline, and remarriage followed by the new spouse's death, which replaces the DSUE. Because the IRS can review the first return when the DSUE is used, valuations on that return should be supportable. The Internal Revenue Manual includes a portability lead sheet for examiners.

Who it is not for

Most surviving spouses should consider the election, but it may not be worth the cost of a Form 706 when both spouses' combined estates are certain to stay well under one exemption, or when credit shelter trust planning already uses the first spouse's exclusion. Portability alone may also not suit blended families or estates with fast-growing assets.

Nonresident noncitizen decedents cannot pass DSUE, and a surviving spouse who is not a U.S. citizen may use DSUE only in limited circumstances, so cross-border families need specific advice.

How ebotCPA helps

We check whether a Form 706 was filed and the election made, compute the DSUE, prepare a timely or Rev. Proc. 2022-32 late return, and track the DSUE in the survivor's gift and estate planning.

Book a $497 Case Analysis to have Ebot Mbi, CPA, EA review your facts before you act.

Primary sources

1. 26 U.S.C. §2010(c)(2) and (c)(5)(A). Applicable exclusion amount and portability election.

   “A deceased spousal unused exclusion amount may not be taken into account by a surviving spouse under paragraph (2) unless the executor of the estate of the deceased spouse files an estate tax return on which such amount is computed and makes an election on such return that such amount may be so taken into account.”

   Adds the DSUE to the survivor's exclusion and requires an election on a filed estate tax return.

2. Treas. Reg. §20.2010-2. Portability election rules.

   Sets the requirements for a timely, complete return and the DSUE computation.

3. Rev. Proc. 2022-32. Simplified method for a late portability election.

   “on or before the fifth annual anniversary of the decedent's date of death”

   Allows estates not required to file to elect portability up to five years after death.

4. Rev. Proc. 2025-32. 2026 inflation adjustments.

   Confirms the $15,000,000 basic exclusion amount for 2026.

5. IRM 4.25.5.2.26. Portability lead sheet.

   Provides examination procedures for DSUE elections and computations.

Frequently asked questions