With the Federal Estate Tax (“FET”) exclusion currently at $15,000,000, there aren’t many people that need to file Form 706 Federal Estate Tax Return (“706”) when a spouse passes away. The important question usually isn’t whether it’s necessary to file a 706, but rather whether it’s beneficial. Filing a 706 for portability can be a valuable estate planning tool for a surviving spouse.
Filing a 706 for portability allows a deceased spouse’s unused exclusion (“DSUE”) amount to be transferred to the surviving spouse’s exclusion amount that can be used against lifetime taxable gifts or their own taxable estate upon their death.
For example, if Spouse A died in January of 2026 with a taxable estate valued at $13,000,000, they would still have $2,000,000 of unused exclusion. Spouse B could file a 706 for portability and transfer that $2,000,000 of DSUE to their own exclusion amount. Spouse B – who has not yet made any taxable gifts during their lifetime – would then have a total exclusion amount of $17,000,000. This could be extremely helpful, especially if any of those assets are securities or other assets with the potential to increase significantly in value.
Using the same example, Spouse B also had a taxable estate valued at $13,000,000 in January of 2026, but after receiving $2,000,000 from Spouse A’s estate, their taxable estate is now worth $15,000,000. Due to some good investments, Spouse B’s taxable estate was worth $17,000,000 when they died in July of 2026. If Spouse B never filed a 706 for portability, their estate would have owed $800,000 in estate taxes (40% of the $2,000,000 exceeding their own exclusion). Because Spouse B did file for portability, however, their combined exclusion equals their full taxable estate amount and no estate tax is owed at all.
For married couples with large taxable estates around $10,000,000 and over, filing for portability is usually an easy decision. For married couples with taxable estates in the low millions or less, it’s usually an equally easy decision to not file a 706 for portability. The question tends to be more difficult for couples in that middle range for two main reasons. First, it may be unlikely that their assets will grow enough to ever come close to the current exclusion amount, but it may not be completely inconceivable that could happen, especially if the surviving spouse is relatively young when the first spouse dies. Second, the current exclusion amount is just that – current. While the exclusion amount is not presently set to expire or be reduced at any time, there’s no way to predict the future in that aspect. Congress could lower the exclusion at any time. A surviving spouse may not file a 706 for portability thinking $15,000,000 will be more exclusion than they will ever need, but if the exclusion later gets reduced to $5,000,000 (the exclusion amount in 2010 and 2011), that could end up being a costly decision. By filing for portability, the DSUE gets locked in so that if a spouse dies in 2026, the surviving spouse will always have that $15,000,000 of exclusion available even if the FET exclusion is reduced in the future.
There is a downside, of course. Filing a 706 can be costly. Even filing a 706 solely for portability takes significant time and effort which will translate to significant attorney or accountant fees. If that wasn’t the case, the decision on whether to file one would be much easier and far more people would do it. It’s an investment, however. Like any estate plan, it’s a cost that you pay upfront to benefit your loved ones and make things easier for them when you pass away. Whether or not that investment is right for you depends on various factors and should be discussed with a knowledgeable estate planning attorney.
The attorneys at Cavich can help you weigh the costs and benefits of filing a 706 for portability and help you decide if it is the best option for you and your loved ones.