Most estate tax “surprises” are not caused by complex planning. They are caused by a missed filing.
With today’s generous federal exemption, many married couples assume estate tax is off the table. But one procedural step can still create a seven figure problem: the portability election.
If you are married, you want your executor to know this before it matters.
The quiet risk: portability is not automatic
A deceased spouse’s unused federal estate and gift exemption can be transferred to the surviving spouse. This is the portability election.
Why it matters: it can increase the amount the surviving spouse can pass to heirs free of federal estate tax later.
What most people miss: the benefit is not automatic. It has to be elected properly, and it usually requires a timely filed Form 706.
How the money gets lost
Here is the failure pattern:
The first spouse dies and no estate tax is owed.
The family assumes “no tax due” means “no return needed.”
Form 706 is not filed, or it is filed late, or it is filed incorrectly.
Years later, the surviving spouse’s estate grows, a liquidity event happens, or the exemption environment changes.
The estate discovers the unused exemption from the first spouse was never preserved.
The surviving spouse’s estate pays tax that could have been avoided.
This is where the dollars get real.
The filing rule that controls everything
To preserve portability, the executor of the first spouse’s estate must make the election. The standard path is to file a complete, properly prepared Form 706 on time.
Key timing points to keep straight:
Form 706 is generally due within 9 months of death.
An automatic 6 month extension is available by filing Form 4768.
If no estate tax is owed because the estate is below the filing threshold, there may be an alternative timing window to file Form 706 to elect portability, but the deadline still matters and should be tracked.
Bottom line: portability is a compliance step, not a planning concept.
Why this matters even if you are “not that wealthy”
Portability is an insurance policy against uncertainty.
Uncertainty includes:
A future business sale
A concentrated investment position that spikes in value
Real estate appreciation
Inheritance from another family member
Law changes that reduce exemptions or raise rates
A second marriage and blended family planning complexity
The portability election protects flexibility. Once missed, the unused exemption is generally gone.
The executor checklist that prevents the mistake
If you are married, you want these questions answered in advance, not during a stressful month after a death.
Executor decision screen:
Do we need to preserve the deceased spouse’s unused exemption for the survivor?
Who is responsible for engaging the professional who prepares Form 706?
What is the Form 706 deadline and extension plan?
Are we filing solely to elect portability, and if so, are we using the correct reporting method?
Are we documenting that the election was actually made, not just that a return was started?
A “good enough” filing process is not good enough here. The election has to be made correctly and on time.
What to do next
If you are married and you have not explicitly discussed portability and Form 706 responsibilities with your executor, that is the gap.
We can do a quick review to confirm:
Whether portability should be elected in your situation
Who should own the filing responsibility
What your deadline and extension plan should be
How to reduce administrative friction for your executor
Contact Brothers Tax here:
https://www.taxbrothers.tax/contact
Disclosure
This article is for educational purposes only and is not tax or legal advice. Estate tax outcomes depend on facts, timing, citizenship status, elections, and current law. Coordinate with qualified estate and tax professionals before relying on any filing strategy.