Can an estate elect portability after the filing deadline?

Key takeaway

Yes. If the decedent was a U.S. citizen or resident who left a surviving spouse, the executor had no filing requirement apart from portability, and no timely estate tax return was filed, the executor may obtain simplified relief by filing a complete, properly prepared Form 706 with the required heading by the fifth anniversary of death.

The ordinary filing deadline and extension

The ordinary portability filing deadline is nine months after death. For an automatic six month filing extension, the executor must file Form 4768 by the original Form 706 due date, check the designated box, and complete the form as instructed.

If an extension has been received, Form 706 must be filed before the extension expires.

Check the estate’s filing obligation

For a U.S. citizen or resident decedent, the executor must file when the gross estate exceeds the basic exclusion amount for the year of death, reduced by adjusted taxable gifts.

An estate with that filing obligation cannot use simplified late portability relief. Before preparing a late election, ask the estate’s tax adviser to review the asset records and prior gifts.

Find a link to the exact required heading in the collapsed Sources below.

Prepare the return and supporting documents

The filing executor must sign Form 706 under penalties of perjury. One coexecutor’s signature is sufficient, but all listed executors remain responsible for the return and liable for penalties imposed for erroneous or false returns.

Attach the death certificate. If the decedent was a U.S. citizen or resident who left a valid will, attach a certified copy of the will.

If a certified copy cannot be obtained, attach a copy of the will and explain why it is not certified.

After the simplified relief window

An estate filing only to elect portability that missed both the ordinary deadline and the simplified relief window may seek relief under the discretionary relief regulation.

Ask the estate’s tax adviser to evaluate that request before proceeding.

Deceased spousal unused exclusion

Deceased spousal unused exclusion, or DSUE, is the lesser of the basic exclusion amount or the last deceased spouse’s unused exclusion. Its use requires an irrevocable executor election on a return computing DSUE, filed timely with extensions or under applicable late relief.

Basic exclusion amount

The basic exclusion amount is the exclusion shared by federal estate and gift taxes for U.S. citizens and residents. A surviving spouse’s applicable exclusion amount adds any available DSUE to that basic amount.

EstatePlanner.com resources to open next

Federal transfer tax records and questions checklist. Use this to organize the tax records and questions for your late election discussion. Start here if prior gift information is scattered across family files.
Estate administration records and questions checklist. Open this while gathering the death certificate, will and other estate records. Bring your remaining document questions to the executor’s next adviser meeting.
Federal estate, gift and GST tax. Read this for the broader tax context surrounding the missed election. It provides a place to continue when your questions extend beyond filing relief.

Frequently asked questions

Can a valid late election help with transfers already made after the death?

Yes. A valid portability election is effective as of the decedent’s death, allowing the surviving spouse to apply the resulting DSUE to subsequent transfers, subject to the last deceased spouse and DSUE limits described above.

Can the IRS revisit the deceased spouse’s return when the survivor uses DSUE?

Yes. When the survivor applies DSUE to a lifetime gift or a bequest at death, the IRS may examine the deceased spouse’s return to verify DSUE, even after the assessment limitation period has expired.

That examination may reduce or eliminate DSUE. Any assessment of additional tax against the deceased spouse’s estate remains subject to the applicable assessment limitation period.

Does portability also transfer the deceased spouse’s GST exemption?

No. The GST exemption is separate and is not portable. Its amount follows the basic exclusion amount, so DSUE does not increase it.

Sources

IRS Instructions for Form 706: portability filing deadlines, requests for relief after the simplified window, signatures, supporting documents, election effectiveness and DSUE examinations.
IRS Instructions for Form 4768: timely application, designated box and completion requirements for an automatic filing extension.
IRS simplified relief procedure: eligibility and filing requirements. See section 4.01(2) for the exact wording of the required return heading.
Federal exclusion and portability statute: basic and applicable exclusion amounts, DSUE limits, election requirements and examination authority.
Federal estate tax return filing statute: estate tax return filing requirements.
Federal GST exemption statute: the separate GST exemption.
The discretionary relief regulation: the regulation referenced by the Form 706 instructions for requests after the simplified relief window.