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Many married couples assume that if everything is left to the surviving spouse, no additional estate tax planning is necessary. While that may be true in the short term, failing to make one important election after the first spouse dies could cost a family millions of dollars in unnecessary federal estate taxes later.

That election is called portability.

What Is Portability?

Portability allows a surviving spouse to inherit the unused portion of a deceased spouse’s federal estate and gift tax exemption. In simple terms, if the first spouse dies without using all of their federal exemption, the surviving spouse may be able to add that unused amount to their own exemption and “bank it” for future use.

This can significantly increase the amount that can pass to children or other beneficiaries free of federal estate tax.

For many families, portability provides valuable flexibility while helping preserve wealth for future generations.

The Current Federal Estate Tax Exemption

For 2026, the federal estate and gift tax exemption is $15 million per person. A married couple can therefore shield $30 million from federal estate tax, but only if the surviving spouse makes a timely portability election to preserve the deceased spouse’s unused exemption.

Without portability, the surviving spouse loses the deceased spouse’s unused exemption, leaving only their own exemption available.

The Catch: Portability Is Not Automatic

One of the biggest misconceptions is that portability happens automatically. It does not.

To preserve the deceased spouse’s unused exemption, the estate’s personal representative must file IRS Form 706 (United States Estate Tax Return) and properly elect portability.

Generally, for taxable estates, the return must be filed within nine months of the date of death, although an automatic six-month extension is available if requested on time. For non-taxable estates, the IRS provides additional relief that may allow you to make the portability election up to five years after death, provided certain requirements are met.

Missing these deadlines will result in the permanent loss of the deceased spouse’s unused exemption.

When Should You Elect Portability?

Although every family’s circumstances are different, portability is often a wise decision in situations such as these:

Your Combined Estate Could Exceed the Federal Exemption

If your combined assets may eventually exceed the available federal estate tax exemption, portability can help protect your family from federal estate taxes that may reach 40%.

Consider a married couple with a $30 million estate. The first spouse dies and leaves everything to the surviving spouse. Because of the unlimited marital deduction, no estate tax is due at the first death.

If the executor timely files IRS Form 706 and elects portability, the surviving spouse can preserve the deceased spouse’s unused $15 million exemption and “bank it.” When the surviving spouse later dies with a $30 million estate, the combined exemptions can generally shelter the entire estate from federal estate tax.

However, if portability is not elected, the deceased spouse’s unused exemption is permanently lost. The surviving spouse would have only their own approximately $15 million exemption, leaving roughly $15 million subject to federal estate tax. At the current 40% federal estate tax rate, the family could owe approximately $6 million in federal estate taxes that might have been avoided with a timely portability election. These numbers are staggering.

This example illustrates why portability is one of the most valuable, and most frequently overlooked, estate tax elections available to married couples.

Your Assets Are Likely to Grow

Even if your estate is below today’s exemption amount, substantial appreciation in investments, businesses, or California real estate could push your estate above future exemption limits.

Electing portability today may save significant taxes tomorrow.

You Want Protection Against Future Law Changes

Federal estate tax exemptions have changed dramatically over the years and are subject to future legislation.

Making a timely portability election locks in the deceased spouse’s unused exclusion amount, providing an important safeguard if exemption amounts are reduced in the future.

The First Spouse Used Only Part of Their Exemption

If the deceased spouse made taxable lifetime gifts but still had some exemption remaining, portability allows the surviving spouse to preserve and use that unused balance.

Is Portability Always Enough?

Not necessarily.

While portability is an excellent planning tool, it is not a substitute for a well-designed estate plan.

For example:

• Portability does not apply to the federal Generation-Skipping Transfer (GST) tax exemption.
• California does not currently have its own estate tax, but families who own property in other states may face additional state estate tax issues.
• Certain trusts can still provide creditor protection, asset management, remarriage protection, and tax-planning benefits that portability alone cannot provide.

Every family should evaluate whether portability alone meets their goals or whether trust-based planning provides additional advantages.

Don’t Miss the Opportunity

One of the greatest tragedies we see is when families lose a valuable tax benefit simply because they didn’t know an estate tax return needed to be filed.

Even estates that are not otherwise required to file a federal estate tax return may benefit from filing solely to elect portability.

If you’ve recently lost a spouse or are planning your estate, now is the time to discuss whether portability should be part of your overall estate planning strategy.

An experienced estate planning attorney can help determine whether making the election today could save your family substantial taxes in the future.

Questions about portability or your estate plan? The attorneys at Botti Law Group, Ltd., help California families understand complex estate planning strategies and make informed decisions that protect their loved ones and preserve their legacy.

Thanks for reading. Christopher E. Botti, Esq., Certified Specialist in Estate Planning, Trust and Probate Law.

This blog is for informational purposes only and does not constitute legal advice. Every situation is unique, and you should consult with a qualified attorney for advice regarding your specific circumstances.