The federal estate tax exemption is currently $12.06 million per taxpayer. However, in 2026, the exemption amount is set to decrease to $5 million, indexed for inflation (estimated to be between $6-$7 million). The current high threshold means many estates are not required to file a federal estate tax return (Form 706).

Even if an estate is not required to file a federal estate tax return, it may still be beneficial for a surviving spouse to file a Form 706 for the sole purpose of making a portability election.

A portability election allows a surviving spouse to add the unused exemption of his or her deceased spouse to his or her own federal estate and gift tax exemption amount. A portability election must be made on a federal estate tax return for the deceased spouse’s estate. In a recent ruling, Revenue Procedure 2022-32, the IRS extended the permitted timeline to file a portability-only estate tax return from two years after the death of the surviving spouse to five years after the death of the surviving spouse.

As such, individuals who were widowed in the last five years (and the executors of such estates) should consider whether a federal estate tax return should be filed for their deceased spouse’s estates to elect portability, even if the estate is worth less than $12.06 million. A portability election may prove very valuable at the death of the later spouse’s death, particularly if the death of the second spouse occurs at a time when the federal estate tax exemption is less than its current $12.06 million mark.

If you are interested in filing a federal estate tax return to make a portability election or have any questions about estate tax returns, please reach out to our estate planning attorneys including Ryan Montgomery, Kara Novak, Kaitlyn K. Perez, Allison Int-Hout, and Matthew Hart.