The Role of Portability in Estate Tax Planning

When it comes to estate planning, one tool that often flies under the radar is portability—a valuable option that allows married couples to transfer unused estate tax exemption amounts from one spouse to the other. This can be a powerful way to reduce or eliminate estate taxes, but it’s not automatic, and it has limitations that you should understand to make the most of it.

Portability allows a surviving spouse to claim the unused portion of their deceased spouse’s federal estate tax exemption. Currently, the federal estate tax exemption is quite generous—$13.99 million per person in 2025. That means that an individual can pass up to that amount to heirs without paying federal estate tax. With portability, a married couple can potentially double that exemption to nearly $28 million.

However, portability isn’t automatic. It’s a post-death election—meaning that after the first spouse dies, the estate’s executor must file a federal estate tax return (Form 706) to elect portability and preserve any unused exemption for the surviving spouse. This is required even if the estate itself isn’t large enough to owe any estate tax.

So why does this matter a little bit extra right now?

Under current law, the estate tax exemption is scheduled to sunset at the end of 2025, dropping back to around $7 million per person (adjusted for inflation). Whether Congress will act to extend the current higher limits is uncertain. This makes portability even more valuable: by capturing the unused exemption now, a surviving spouse may be able to preserve that higher amount—even if the exemption is lower when they pass away.

While portability can be a helpful safety net, it’s not always the best solution for every family. Plus, one spouse has to die in order to take advantage of portability so timeliness cannot be controlled. Here are a few key limitations:

• Post-Death Election: As mentioned, portability must be elected on a timely filed estate tax return, typically within nine months of the first spouse’s death (with extensions available). Miss that deadline, and the exemption is lost.

• GST Tax: Portability doesn’t apply to the generation-skipping transfer (GST) tax exemption, which means it won’t help if you want to plan for grandchildren or further generations.

• State Estate Taxes: Some states impose their own estate taxes and do not allow portability, which could create a tax liability even if the federal estate tax is avoided.

While portability is a useful tool, it’s not the only one in the toolbox. Lifetime gifts, irrevocable trusts, charitable giving, and other planning strategies can help reduce the size of your taxable estate—sometimes more efficiently than relying on portability alone.

Portability offers a valuable opportunity to double up on estate tax exemptions and provide significant tax savings for your family. But it’s important to act thoughtfully—and promptly—to ensure it’s preserved. Given the uncertainty about whether the current high exemptions will continue beyond 2025, now is an especially good time to review your estate plan and make sure you’re not missing out on this key benefit.