How to Minimize the (Voluntary) Federal Estate Tax with Portability

Most people may be surprised to learn that some consider the federal estate tax to be voluntary. Estate planning attorneys used to say, “You only pay if you do not plan.” The relatively recent introduction of portability provides yet another planning tool available to married couples to minimize federal estate tax with portability and eliminate estate taxation. Portability allows a surviving spouse to “pocket” and save their deceased spouse’s unused exclusion amount (technically referred to as the deceased spousal unused exclusion amount or DSUE) and add it to their own exemption. Here is how portability works.

If the taxable estate of the first spouse to die is below the then-current federal gift and estate tax exemption limit at the time of their death, or if the deceased spouse’s entire estate passes to the surviving spouse under the marital deduction, the DSUE can be transferred (or ported) to the surviving spouse. Portability requires that an estate tax return be timely filed upon the first spouse’s death. As a result of portability, the surviving spouse can use their own federal estate tax exemption amount, plus the deceased spouse’s unused exemption (DSUE), to minimize federal estate tax with portability and avoid estate taxes upon their passing.

The Key Takeaways

• Everyone still needs lifetime estate planning to protect themselves, their families, and their assets (money and property). Estate planning is not just about tax planning—it is also about communicating your wishes to loved ones, being able to specify what happens to you and your assets during incapacity and at death, leaving a lasting legacy, and helping to avoid conflict when you are no longer present.
• Failure to utilize both spouses’ federal estate tax exclusions may result in an unnecessarily high tax bill for high-net-worth married couples.
• Portability lets married couples use both of their estate tax exclusions wisely. To minimize federal estate tax with portability, timely estate tax filing is crucial.
• Portability is not automatic. An estate tax return must be filed after the death of the first spouse, generally within nine months.

How Portability Works

With the enactment of the Tax Cuts and Jobs Act (TCJA) of 2017, the federal estate tax exemption doubled to $10 million adjusted for inflation (in 2025, the exemption is $13.99 million). As a result, even fewer families have to worry about federal estate taxes. However, this provision of the TCJA is set to sunset on December 31, 2025. Barring intervention by Congress, the federal estate tax exemption will drop back down to the previous $5 million amount (adjusted for inflation).

Interestingly, a surviving spouse may use only the DSUE amount from their most recently deceased spouse and cannot combine or accumulate DSUE amounts from multiple prior spouses. Here is an example of the interplay between the DSUE and remarriage:

Sue was married to Bob, who passed away in 2020 with $5 million of unused federal estate tax exemption. She filed a timely Form 706 and elected portability, preserving Bob’s $5 million DSUE. A few years later, in 2024, Sue married Phil. When Phil died in 2025, he had a DSUE of only $2 million to transfer. Sue chose not to file an estate tax return for Phil, assuming that she could continue to rely on Bob’s larger DSUE.

However, under the Internal Revenue Service’s portability rules, the ability to use a DSUE is based solely on the identity of the most recently deceased spouse, not on whether a portability election has been made. Because Phil is now Sue’s most recently deceased spouse, she automatically loses access to Bob’s $5 million DSUE, regardless of her decision not to file a Form 706 for Phil.

This outcome underscores how remarriage and the timing of a subsequent spouse’s death can inadvertently eliminate a previously secured exclusion amount, even when no action has been taken.

What You Need to Know

Portability is an essential component of estate tax planning for married couples that is used after the first spouse passes away. However, trust planning during the married couple’s life should be used with or without portability and is still highly relevant for couples with an estate of any size.

When children are involved, especially if they are from a previous marriage or relationship, trust planning can enable the first spouse to die to provide for the surviving spouse and maintain control over who will ultimately receive the remaining balance of their estate.

In addition, trust planning can protect assets from a beneficiary’s irresponsible spending, creditors, medical crises, lawsuits, and divorce proceedings, allowing the assets to remain within the family for generations to come. Trust funds can also provide for a special needs beneficiary without that beneficiary losing valuable government benefits.

Actions to Consider

• Ask your estate planning team if and when you need to be concerned about estate taxes beyond the federal level of taxation. Some states have their own estate or inheritance tax, often with a lower exemption than the federal estate tax. As a result, an estate may be subject to statetaxes even if it is exempt from federal taxes.
• When your spouse passes away, consult with your estate planning attorney to determine if portability is a suitable option for you. Most married couples can minimize federal estate tax with portability, even if only as a preventive measure in estate planning. The value of their assets may exceed the applicable exemption amount before they pass away.
• If your subsequent spouse is seriously ill, ask your estate planning attorney if you should use any remaining exemption amount you may have from a previous spouse to make lifetime gifts to beneficiaries.
• When your spouse dies, and you want to port their unused exemption amount, ensure that the estate tax return (Form 706) is prepared and filed promptly by a qualified professional, such as an estate planning attorney, to elect portability.
• Ask your estate planning team about nontax trust protections such as asset protection, incapacity planning, and probate avoidance.