Surviving spouses stand to lose millions of dollars in tax protection if their families miss a single IRS filing deadline. Federal law allows married couples to transfer unlimited assets to each other free of estate tax, but the second half of that equation, preserving the deceased spouse’s unused exemption for later use, depends entirely on whether someone files Form 706 on time. With the estate-tax exemption scheduled to drop sharply after 2025, the stakes of that paperwork have never been higher for families with significant wealth.
Why the Marital Deduction and Portability Demand Attention Before 2026
The federal estate-tax marital deduction, codified in Section 2056, reduces the taxable estate by the value of qualifying property interests passing from the decedent to the surviving spouse. That deduction is effectively unlimited for transfers between U.S. citizen spouses, which means a married person can leave an entire estate to a surviving partner without triggering any federal estate tax at the first death.
The catch arrives at the second death. Whatever exemption the first spouse did not use can be transferred to the survivor through a mechanism called portability of the deceased spousal unused exclusion, or DSUE. To lock in that transfer, the executor of the first spouse’s estate must file Form 706 with the IRS, even when no estate tax is owed. The IRS estate FAQ states plainly that a timely Form 706 is required to elect portability. Skip that step, and the unused exemption vanishes.
The exemption amount is scheduled to fall after 2025, which means the DSUE preserved by a timely filing today could represent a far larger shield than what will be available under future law. Estates that act within the current window effectively bank the higher exemption for the surviving spouse’s later use. Those that do not file lose that protection permanently.
How Rev. Proc. 2022-32 Expanded the Filing Window for Late Portability Elections
Many estates where the first spouse died with assets below the filing threshold never submitted Form 706, because no tax was due. Recognizing that missed portability elections were costing families real money, the IRS issued Rev. Proc. 2022-32, which created a simplified method for certain estates to obtain an extension of time to elect portability. The procedure allows qualifying estates up to five years from the date of death to file Form 706 solely for this purpose, superseding the earlier Rev. Proc. 2017-34.
Under this relief, an estate that was not otherwise required to file Form 706 can submit a return within the extended period and treat it as timely for portability. The return must be complete and properly prepared, but the focus is on reporting enough information to compute the DSUE amount rather than on paying tax. The simplified method is designed to avoid the cost and uncertainty of a private letter ruling, which was historically the only way to obtain relief for a late portability election.
Eligibility is not universal. The decedent must have been a U.S. citizen or resident, the estate must be under the filing threshold for the year of death, and no estate tax return may have been previously filed. Executors must also include a specific statement on the return indicating that it is being filed pursuant to the revenue procedure to elect portability. If those conditions are met and the filing occurs within five years of death, the IRS will generally treat the portability election as if it were made on time.
Coordinating Portability With the Coming Exemption Sunset
The five-year window created by Rev. Proc. 2022-32 intersects with the scheduled reduction in the estate-tax exemption after 2025 in ways that demand careful planning. For couples where one spouse has already died, a late portability filing may secure a DSUE amount based on the higher exemption in effect at that earlier death. That preserved amount could significantly exceed the exemption that will be available when the surviving spouse later dies under post-2025 law.
Executors and surviving spouses should therefore review prior deaths in the family since portability became available and determine whether any estates qualify for the simplified late election. In some cases, filing Form 706 now, even years after the first death, may be the only way to protect a combined exemption large enough to keep the surviving spouse’s estate below the taxable threshold. Families who assume that “no tax due” means “no return required” risk forfeiting a benefit that cannot be recreated once the window closes.
Looking ahead, couples with substantial assets should also coordinate portability with other estate-planning strategies, such as lifetime gifting and the use of trusts. While the marital deduction can defer estate tax until the second death, it does not by itself increase the total exemption available to the couple. Portability, by contrast, allows the surviving spouse to stack the deceased spouse’s unused exclusion on top of their own, but only if the technical requirements are met. Combining these tools thoughtfully can help families navigate both the current high-exemption environment and the lower thresholds expected after 2025.
The common thread is timing. The law offers generous opportunities to shelter wealth from estate tax, but it also imposes rigid deadlines and procedural rules. Missing a Form 706 filing, whether at the original due date or within the extended five-year window, can erase a surviving spouse’s best defense against future tax liability. For families who have lost a spouse in recent years, confirming whether a portability election was made-and, if not, whether relief is still available-may be one of the most valuable financial reviews they can undertake before the exemption shrinks.
