Portability allows a surviving spouse to use the deceased spouse's unused estate tax exemption. To qualify for portability, the deceased spouse must have been a U.S. citizen and the executor must file an estate tax return within 9 months of death electing portability. This estate tax return calculates the deceased spouse's unused exemption amount, known as the deceased spouse unused exclusion (DSUE) amount, which the surviving spouse can then use for their own exemption. The DSUE amount can only be used from the estate of the individual who was the most recently deceased spouse.

1. Portability Regulations and Applicability
Portability can be a very complicated situation to any person, especially during a
time of mourning, and not wanting to lose more than you already have.
What is Portability and How Can it Help me?
Portability was an amendment to the Job Creation Act of 2010 which stated “to allow
the estate of a decedent who is survived by a spouse to make a “portability election” in
which allows the surviving spouse to apply the Deceased Spouse Unused to Exclusion
(DSUE) amount of the surviving spouses own transfers during life and death” and
became permanently affective June 16, 2015 (unless the spouse became deceased
from January 1, 2001 through June 12, 2015) and is for qualified U.S Citizens.
Current portability requirements:
1. decedent must be a U.S Citizen
2. The DSUE amount portability election must be made on a timely 706 within 9
months of death, or, when allowed, within 15 months using automatic extension
3. The estate tax return must be complete and properly prepared
4. The unused exclusion amount may only be used from the “last deceased
spouse”
Because this still holds lots of financial jargon, lets break it down by requirement;
1. Descendent Must be a U.S Citizen:
This one is self-explanatory, although there are exceptions to spouse who
became U.S citizens after the passing of their spouses, and can utilize portability
starting the day they become citizens. Qualified Domestic Trust Persons also fall
into exemptions to this regulation.
2. The DSUE Amount for Portability Election Must be Made in a Timely
manner:
Let’s start by explaining what a portability election is and how it is made;
The decedent’s executor is responsible for the decision of whether to make the
portability election or not, however, when there is no existing no executor, anyone that
is in the possession of the decedent’s property can elect to file the tax return.

2. The Estate Tax Return Must be Complete and Properly Prepared
The surviving spouse is required to file an estate tax return within 9 months of death, or,
when allowed by the IRS within 15 months using automatic extension. This estate tax
return must be complete and submitted because it is over the federal income amount
(5.45 mill in 2016) and an extension for 15 months after date of passing cannot be
granted if the estate is over that amount, however, if the estate is under the amount the
IRS may grant an extension in order to elect portability.
By now you’re probably wondering how to calculate DSUE since it seems to play a
major role in being able to elect or qualify for portability;
How to Calculate the DSUE
- Find the basic exemption rate for that year
- If descendent paid gift tax on taxable gifts because the taxable gifts exceeded
the applicable exemption amount at the time of gift
- Then these gifts are exempted from adjusted taxable gifts for purposes of
computing the descendants DSUE amount
This adjustment is necessary so that the descendants’ exemption amount is not
used for amounts on which gifts tax is paid.
- Final regulations state that eligibility for the estate tax credit does not factor into
the calculation of the DSUE amount
- It is calculated by subtracting the applicable credit and then applying the credits
from the 2012 through 2015 sections.
3. Last deceased spouse provision
The surviving spouse can claim any unused exclusion amount that is left over from the
death of the first spouse to die, but the descendent must be the survivors’ last deceased
spouse (the most recent deceased individual who was married to the surviving spouse
at the individuals death, other rules for those with more than one deceased spouse.