What Is Portability
Portability is a federal tax rule that allows a surviving spouse to claim any unused portion of their deceased spouse's estate tax exemption. For 2024, each person has a $13.61 million exemption. If your spouse didn't use their full exemption, you can add the unused amount to your own, potentially up to $27.22 million combined. Without portability, that unused exemption would simply disappear.
This matters because most people don't leave behind estates large enough to trigger federal estate taxes. The median estate value in the US is well below the exemption threshold. However, if you own a business, significant real estate, investment portfolios, or life insurance policies, your estate could exceed the exemption limit. Portability preserves your spouse's exemption so you don't lose it entirely.
How It Works in Practice
To use portability, your spouse's executor must file Form 706 (the federal estate tax return) within nine months of death, even if the estate owes no taxes. This deadline can be extended by six months if you file for an extension before the initial deadline. Many people overlook this requirement because they assume small estates don't need tax returns. Filing Form 706 is the only way to preserve the exemption for the surviving spouse.
Once you file and establish the unused exemption amount, you can carry that forward for the rest of your life. If you remarry, the new spouse cannot use the exemption from your first spouse. You keep it, but cannot transfer it further down to children or grandchildren.
When to Focus on This
Portability becomes relevant during the estate administration phase, typically handled by the executor or a probate attorney. If you're grieving and managing your spouse's affairs, this is one of several important financial tasks that need attention alongside updating beneficiaries, closing accounts, and addressing debts. Many bereaved spouses find it helpful to work with an estate attorney or tax professional rather than navigating this alone while processing grief.
The filing deadline is firm. Missing it means losing the exemption permanently. If you suspect your spouse's estate might benefit from portability but the Form 706 deadline has passed, consult a tax attorney about possible relief options.
Common Questions
- Do I need to file Form 706 if my spouse's estate is small? Yes, if you want to preserve unused exemption. You must file even for small estates. If you skip it, the exemption is forfeited.
- What if my spouse had debts or taxes owed? Portability applies separately from the estate's obligations. You can claim the unused exemption regardless of whether the estate had debts. The executor handles estate debts and taxes through the probate process.
- Can I use portability if my spouse had a revocable trust instead of a will? Yes. Portability applies regardless of how your spouse structured their estate. The requirement is still filing Form 706 within the deadline.