Unfortunately, the portability of the exemption isn’t automatic. The transfer of the unused exemption amount to the surviving spouse happens only if it is elected by the executor of the first spouse to pass away. It is elected simply by filing an estate tax return.

Is the estate tax exemption portable?

Portability is only available to married couples. The amount of the estate tax exemption that was not used for the deceased spouse’s estate can be transferred to the surviving spouse if the first spouse dies and the value of their estate doesn’t use up all the exemption. This is a federal exemption.

Can you file a late 706 for portability?

The IRS, thankfully, has made electing portability easy. If the executor timely files the decedent’s Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, which generally is due nine months after the decedent’s date of death, portability is automatically elected.

How does estate tax exemption portability work?

Portability allows a surviving spouse the ability to transfer the deceased spouse’s unused exemption amount (DSUEA) for estate and gifts taxes to a surviving spouse, so long as the Portability election is made on a timely filed federal estate tax return (IRS Form 706).

Do you have to file 706 for portability?

In order to elect portability of the decedent’s unused exclusion amount (deceased spousal unused exclusion (DSUE) amount) for the benefit of the surviving spouse, the estate’s representative must file an estate tax return (Form 706) and the return must be filed timely.

Do you have to file a Form 706 for an estate?

Thus, estates not required to file the Form 706 because the decedent’s gross estate is below the minimum amount required for an estate tax return to be filed, nevertheless, must file a completely filled out a Form 706 and make the portability election on such return if the second spouse ever hopes to use the first spouse’s unused exclusion amount.

Do you need to file a Form 706 for portability?

The instructions explain that if an estate intends to elect portability, timely filing (including extensions) a complete Form 706 is all that is required. The deceased spouse’s unused exclusion must be computed on the return.

When did the IRS post the Form 706?

In October, the IRS posted Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return , and its final instructions.

What happens to unused estate tax exclusion after Portability?

Portability allows the first spouse to die to leave his or her unused estate tax exclusion amount to the surviving spouse. The unused estate tax exclusion is technically called the “Deceased Spousal Unused Exclusion Amount” (“DSUE”).