Portability in estate planning is a rule that lets a surviving spouse inherit whatever portion of the federal estate and gift tax exclusion the deceased spouse didn’t use, so the couple’s exclusions can be combined instead of one being wasted. For 2026 the individual exclusion is $15 million, meaning a married couple using portability can shield up to $30 million from federal estate tax.1Internal Revenue Service. What’s New — Estate and Gift Tax The catch is that portability is never automatic. The executor of the first spouse to die has to affirmatively elect it on a federal estate tax return, and skipping that step permanently forfeits the unused amount.
How the Unused Exclusion Passes to the Surviving Spouse
Every individual has a federal estate and gift tax exclusion, which is the total amount they can transfer during life or at death without triggering federal tax. Whatever portion the first spouse doesn’t use is called the Deceased Spousal Unused Exclusion, or DSUE. Portability lets the surviving spouse add that DSUE on top of their own exclusion.2Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax
A concrete example makes the math easier. Suppose the first spouse dies in 2026 having already used $6 million of their exclusion on lifetime gifts. That leaves $9 million of the $15 million exclusion unused. If the executor elects portability, the surviving spouse’s total applicable exclusion becomes their own $15 million plus the $9 million DSUE, or $24 million.2Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax The DSUE can be spent on lifetime gifts as well as at death, so the surviving spouse can begin transferring assets to children or others without gift tax while still alive.
The current $15 million figure comes from the One, Big, Beautiful Bill Act, signed into law on July 4, 2025, which raised the basic exclusion and made the higher amount permanent. Starting in 2027 the $15 million will be adjusted annually for inflation.1Internal Revenue Service. What’s New — Estate and Gift Tax
How to Elect Portability
Portability is elected by filing Form 706, the federal estate tax return, for the deceased spouse’s estate. This is required even when the estate is small enough that no return would otherwise be needed and no tax is owed.3Internal Revenue Service. Instructions for Form 706 Completing the portability section of Form 706 is the entire election; there is no separate form or letter.4Internal Revenue Service. Form 706 (Rev. August 2025) United States Estate (and Generation-Skipping Transfer) Tax Return
Form 706 is normally due nine months after the date of death. An automatic six-month extension is available if the executor files Form 4768 before the nine-month deadline passes.3Internal Revenue Service. Instructions for Form 706
If You Missed the Deadline
There is a longer window when the estate wasn’t otherwise required to file. Under Revenue Procedure 2022-32, if the gross estate plus adjusted taxable gifts fell below the exclusion amount and no return was required, the executor has up to five years from the date of death to file Form 706 solely to elect portability. The return must include the statement “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)” at the top.5Internal Revenue Service. Revenue Procedure 2022-32
The five-year window only helps estates that had no independent filing obligation. If the estate was large enough to require a return in its own right, the nine-month deadline (plus the six-month extension when timely requested) is the hard cutoff, and missing it means asking the IRS for a private letter ruling, which is expensive and not guaranteed.
What It Costs to File
Even a portability-only Form 706 is a substantial return to prepare. Professional fees typically run between $1,500 and $3,500 depending on the estate and the preparer. That can feel like an unnecessary expense when no tax is due, but the alternative is losing an exclusion amount taxed at 40% at the survivor’s death. Filing is almost always the right call.
Who Can Use Portability
A few eligibility rules narrow who portability actually helps.
- The deceased spouse must have been a U.S. citizen or resident at death.6Internal Revenue Service. Estate Tax
- The surviving spouse claiming the DSUE must also be a U.S. citizen. A non-citizen surviving spouse generally cannot use a DSUE amount directly.
- Only the DSUE from the most recently deceased spouse counts. If the surviving spouse remarries and the new spouse later dies, the DSUE resets to whatever that new spouse left unused, whether more or less than before.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 isn’t available and the unlimited marital deduction doesn’t apply either. The typical workaround is a Qualified Domestic Trust (QDOT), which defers rather than eliminates estate tax on assets left to the non-citizen spouse. Couples in that situation need specialized advice well before the first death.
What Portability Is Good For
The main draw is simplicity. Before portability existed (it became available for deaths after December 31, 2010), the standard technique for preserving both spouses’ exclusions was a bypass trust, sometimes called a credit shelter trust.6Internal Revenue Service. Estate Tax Bypass trusts had to be drafted in advance, funded correctly at the first death, and administered for the rest of the surviving spouse’s life, with their own tax returns along the way. Portability replaces all of that with a single Form 706 filing.
A Second Step-Up in Basis
The other underrated advantage is at the capital gains level. When assets pass outright to the surviving spouse at the first death, they receive a step-up in basis to fair market value. Because the survivor then owns those assets personally, the assets receive another step-up when the surviving spouse later dies. Heirs who sell afterward may owe little or no capital gains tax.
A bypass trust usually can’t produce that second step-up. Assets in the trust get a step-up at the first death but generally aren’t included in the surviving spouse’s estate at the second death, so their basis stays frozen. For highly appreciated property like real estate or long-held stock, the difference can be significant.
Where Portability Falls Short
Portability is a strong default, but it doesn’t do everything a bypass trust does.
The DSUE Doesn’t Grow
Once the DSUE is set at the first death, it stays fixed. The surviving spouse’s own exclusion continues to adjust annually for inflation, but the inherited portion does not.7National Archives. Portability of a Deceased Spousal Unused Exclusion Amount Over a long widowhood, the real value of the DSUE erodes. Assets held in a bypass trust, by contrast, can appreciate outside the surviving spouse’s estate entirely.
The GST Exemption Isn’t Portable
The generation-skipping transfer tax applies to wealth passing to grandchildren or more remote descendants and has its own separate exemption. That GST exemption cannot be transferred to a surviving spouse. If the first spouse dies without using it, it’s gone. Families planning across three or more generations need to allocate the first-to-die spouse’s GST exemption through trusts rather than assuming portability covers it.
No Creditor or Remarriage Protection
Assets that pass outright to the surviving spouse belong to that spouse personally, which means they’re exposed to the survivor’s creditors, lawsuits, and any financial fallout from a later remarriage. A bypass trust can be drafted to shield trust assets from those risks while still supporting the surviving spouse during their lifetime.
State Estate Taxes
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 level, and those state taxes generally do not recognize portability. A surviving spouse can owe nothing federally and still face a state estate tax bill. If you live in a state with its own estate tax, state-level planning has to happen alongside the federal election.
When Portability Is Enough, and When It Isn’t
For couples whose combined estate is comfortably under the exclusion, portability alone usually does the job and keeps administration simple. The families who benefit most tend to share a pattern: one spouse holds most of the assets and dies first. Without portability, the less-wealthy spouse’s exclusion would be wasted unless a trust was already in place. Filing Form 706 fixes that in one step.
A bypass trust still earns its cost in specific situations: estates near or above the combined exclusion where inflation drift on the DSUE matters, families doing generation-skipping planning, couples worried about creditor exposure or remarriage, and residents of states with their own estate tax. Many estate plans use both tools together, giving the executor discretion at the first death to decide how much to shelter in a trust and how much to leave for portability.
Whatever the plan looks like on paper, the executor of a married decedent’s estate should discuss the portability election with a tax professional regardless of estate size. The preparation fee is small compared to the tax that a preserved $15 million exclusion could save the surviving spouse’s heirs later on.