Portability Election Deadline for Estate Tax

The portability election is a choice available to a surviving spouse to use any unused portion of the deceased spouse’s federal estate-tax exemption. Without this election, the deceased spouse’s unused exemption is forfeited. The election must be made on a timely filed Form 706 (estate return), and the deadline is 9 months after death—or later if an extension is filed and a request for relief is granted.

The mechanics of portability

Each individual receives a federal estate-tax exemption—the amount they can gift or bequeath free of federal estate tax. In 2024, this exemption is $13.61 million per person. If the first spouse to die does not use the full exemption (for example, if their estate is worth only $8 million and they leave everything to the surviving spouse), the unused $5.61 million can be “ported” to the surviving spouse.

The surviving spouse can then use both their own exemption ($13.61 million) and the inherited unused exemption ($5.61 million), for a combined exemption of approximately $27.22 million. This effectively doubles the exemption available to the couple and can save substantial estate-tax if the surviving spouse’s estate is large.

Without a portability election, the deceased spouse’s unused exemption is simply lost. The surviving spouse’s exemption remains $13.61 million, and any estate value above that is subject to the 40% estate-tax.

Who must file Form 706

A Form 706 must be filed if the gross estate of the deceased exceeds the federal exemption limit in the year of death. However, even if the estate is below the threshold, many estates file Form 706 to elect portability and preserve the unused exemption.

The executor of the deceased spouse’s estate is responsible for filing Form 706 and checking the box to elect portability. Once elected, the election is irrevocable (with limited exceptions).

The 9-month deadline

The primary deadline for filing Form 706 and electing portability is 9 months after the date of death. This deadline is strict: Form 706 must be filed (not merely postmarked) by the deadline to be valid, unless an extension is granted.

Example: If the first spouse dies on June 15, 2024, Form 706 must be filed by March 15, 2025 (9 months from the date of death), to elect portability timely.

Extending the deadline

The executor can request a 6-month extension to file Form 706, extending the deadline to 15 months after death. The extension is requested using Form 4868 (or a request for automatic extension) filed with the return or before the original deadline. If granted, the executor has until the extended deadline to file Form 706 and make the portability election.

Late-filing relief and reasonable cause

If the executor misses both the 9-month deadline and any extension deadline, the generation-skipping-transfer-tax-basics exemption and unused estate-tax exemption can still be preserved through a late-filing relief claim. The IRS has granted relief in cases where:

• The executor acted reasonably and in good faith
• The estate was not notified of the deadline, or the notification was lost
• The executor was a professional (such as a bank or trust company) that failed to act
• The estate suffered circumstances beyond its control, such as the executor’s illness or death

To request relief, the executor must file Form 706 with a statement explaining the delay, along with supporting documentation. The IRS evaluates each case on its merits, and relief is not guaranteed.

In recent years, the IRS has granted late-filing relief in some situations, particularly for smaller estates where the tax impact is minimal or where the executor can demonstrate reasonable cause. However, relief is discretionary and unpredictable.

Portability election and marriage status

Portability is available only to surviving spouses. If the first spouse to die was unmarried, or if the couple was not legally married at the time of death, the unused exemption is forfeited—there is no mechanism to preserve it for someone else.

Similarly, if the surviving spouse remarries, portability is tied to the first deceased spouse only. The surviving spouse retains the portability benefit from the first spouse and cannot use portability from a later spouse.

Planning around portability

High-net-worth couples should plan carefully around portability. If both spouses have substantial assets, simply relying on portability at the first death may be insufficient. For example:

• Spouse A dies with a $20 million estate. If everything goes to Spouse B, Spouse A’s entire exemption is “wasted”—Spouse A had no taxable gifts or bequests. Portability preserves the unused exemption, but if Spouse B’s own estate is also $20 million, the couple still faces an $18.78 million estate-tax (above the combined exemption) at Spouse B’s death.

• Better approach: Spouse A’s will establishes a dynasty-trust-multigenerational-wealth or “credit shelter trust” for the children, funded with $13.61 million. Spouse A’s exemption is used in the will, not wasted. The remaining estate passes to Spouse B. At Spouse B’s death, Spouse B’s exemption plus any portability from Spouse A is available for the remaining assets.

This is sometimes called “exemption-stacking” or “bypass trust” planning.

Coordination with generation-skipping exemption

The generation-skipping-transfer-tax-basics exemption is separate from the estate-tax exemption, but they are equal in amount and must both be allocated. If the first spouse’s estate elects portability of the estate-tax exemption on Form 706, the executor should also allocate any unused generation-skipping-transfer-tax-basics exemption to trusts or transfers to grandchildren. This ensures that the surviving spouse’s own planning can fully benefit from the combined exemptions.

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