Portability allows the first spouse to die to transfer any unused federal estate and gift tax exclusion to the surviving spouse. This unused exclusion is technically referred to as the Deceased Spousal Unused Exclusion Amount, or DSUE. Portability is an important estate planning tool for married couples because it can significantly increase the amount of wealth that may pass free of federal estate and gift tax. Portability was enacted as part of the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 and applies to married individuals dying on or after January 1, 2011. It was later made permanent by the American Taxpayer Relief Act of 2012.

The federal estate and gift tax exclusion amount is adjusted annually for inflation. For 2025, the exclusion amount is $13.61 million per individual. As a result, if the first spouse to die leaves assets to the surviving spouse, those assets generally pass estate tax free under the marital deduction. By properly electing portability, the deceased spouse’s unused exclusion amount may be transferred to the surviving spouse, allowing the surviving spouse to potentially shelter up to $27.22 million from federal estate and gift tax based on current exclusion levels.

In order for the surviving spouse to use the DSUE amount, the executor or personal representative of the deceased spouse’s estate must file a timely and properly prepared Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Part 6 of Form 706 addresses the DSUE election. In many cases, a Form 706 must be filed solely to elect portability, even when no estate tax is otherwise due. The return must generally be filed within nine months of the decedent’s date of death, although a six-month automatic extension is available if timely requested.

Under the last deceased spouse rule, a surviving spouse’s applicable exclusion amount includes the DSUE amount inherited from the surviving spouse’s most recently deceased spouse. Special rules in the portability regulations allow a DSUE amount inherited from a prior deceased spouse to be preserved if the surviving spouse remarries, provided the surviving spouse makes taxable gifts that use the inherited DSUE before becoming widowed again.

If a surviving spouse remarries and later survives a second spouse, the DSUE amount available to that surviving spouse is limited to the DSUE of the last deceased spouse. The applicable exclusion amount is determined by reference to the basic exclusion amount or the applicable exclusion amount of the last deceased spouse, reduced by that spouse’s taxable estate and adjusted taxable gifts. As a result, DSUE inherited from a prior spouse may be lost if not used during the surviving spouse’s lifetime.

The American Taxpayer Relief Act of 2012 also increased the Generation-Skipping Transfer tax exemption to equal the federal estate and gift tax exclusion amount, with annual inflation adjustments. However, portability does not apply to the GST exemption. If the first spouse to die does not use his or her GST exemption through appropriate estate planning, that exemption is permanently lost.

Portability planning should be considered as part of the overall estate planning process while both spouses are living. Numerous factors must be evaluated, including the value and type of assets owned, anticipated inheritances, ages of the spouses, potential growth and appreciation of assets, income tax considerations, step up in basis planning, asset protection goals, second marriages, children from prior relationships, and effective use of the GST exemption.

Trustees, personal representatives, and estate planning advisors should include on their post death planning checklist a discussion of whether a Form 706 should be filed upon the death of the first spouse, even when no estate tax is due, in order to preserve the DSUE amount for the surviving spouse.