How to Make a Late Portability Election

Federal estate tax law allows for “portability,” which permits a surviving spouse to use their deceased spouse’s unused federal estate tax exemption. This amount is called the Deceased Spousal Unused Exclusion, or DSUE. This allows a married couple’s combined exemptions to be used, shielding more assets from estate tax. For 2025, the federal estate tax exemption is $13.99 million per individual. This exemption is scheduled to revert to an inflation-adjusted amount of approximately $7 million in 2026, increasing the importance of a portability election.

The election to use the DSUE must be made on a timely filed estate tax return for the deceased spouse, due nine months after the date of death. The Internal Revenue Service (IRS) has established a simplified procedure for obtaining an extension for those who miss the deadline. This relief acknowledges that not all estates are immediately aware of the benefit of filing for portability.

Eligibility for Late Portability Relief

To qualify for a simplified method of relief for a late portability election, an estate must meet criteria from IRS Revenue Procedure 2022-32. The decedent must have been a U.S. citizen or resident on their date of death, and this date must be after December 31, 2010.

A condition for using this simplified method is that the estate was not otherwise required to file a federal estate tax return. The requirement to file is based on the total value of the decedent’s gross estate and adjusted taxable gifts. If this total value is less than the filing threshold for the year of death, the estate is eligible for this relief. If the estate was legally obligated to file because its value exceeded the exemption amount, this simplified process is not available.

Another condition is that the executor must not have filed a timely estate tax return. The relief is specifically for estates that did not file a return within the initial nine-month deadline, plus any extensions. If a return was filed on time, the decision to elect portability would have already been made.

The simplified method for a late election is available for a limited time. The estate must file the return making the election on or before the fifth anniversary of the decedent’s date of death. If this five-year period has passed, relief may still be possible, but it requires requesting a private letter ruling from the IRS, a more complex and costly process.

Required Information for a Late Election

Making a late portability election requires submitting a “complete and properly prepared” Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. This form is being filed solely to elect portability. The executor must gather specific information to complete this document, including the decedent’s full name, Social Security Number (SSN), and date of death.

The form also requires the full name and SSN of the surviving spouse. A good-faith estimate of the value of the assets in the decedent’s gross estate must be determined. Even though the estate’s value is below the filing threshold, these values must be reported on the appropriate schedules of Form 706.

The filer must then compute the DSUE amount as detailed in Part 6 of Form 706. This calculation involves subtracting the value of the taxable estate and lifetime gifts from the deceased spouse’s exclusion amount for their year of death. The result is the DSUE amount available to the surviving spouse.

A specific notation is required at the top of Form 706: “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)”. This statement indicates the return is being filed under the special relief procedure. Without this language, the return may be processed incorrectly and jeopardize the late election.

The Submission Process

Once Form 706 is prepared with the required notation, it should be mailed to the Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999. Because filing locations can change, confirm the address in the official Instructions for Form 706 before mailing.

After the return is mailed, the IRS will review the submitted Form 706. The review ensures the form is complete and the estate meets the eligibility requirements for late relief. This includes verifying the required statement is present and that the calculations appear correct.

Upon successful processing of the late election, the IRS will issue a confirmation letter. This letter is the official acknowledgment that the portability election has been granted. It confirms the DSUE amount transferred to the surviving spouse.

With the election secured, the DSUE amount becomes available for the surviving spouse’s use. This portable exemption can be applied against any taxable gifts the surviving spouse makes during their lifetime. It can also be used to reduce the tax liability of the surviving spouse’s own estate upon their death. The executor should retain a copy of the filed Form 706 and the IRS confirmation letter as permanent records.