Portability

Portability lets the estate of a first-to-die spouse transfer its remaining lifetime exemption to the surviving spouse. Without portability, any exemption the first spouse didn't use would simply disappear. With it, the survivor may shelter a larger amount from federal estate tax when they eventually die. The exemption amount itself is set by law and changes; families should verify current figures with a qualified estate attorney or CPA.

To claim portability, the executor of the first spouse's estate must file a federal estate tax return within the required timeframe, even if no tax is owed. Missing that deadline can permanently forfeit the benefit. A hypothetical couple where one spouse dies with a modest individual estate could, through a timely portability election, pass a significantly larger combined shelter to heirs.

A common confusion: portability does not apply to the generation-skipping transfer (GST) exemption, which cannot be ported between spouses. Families exploring whether portability alone is sufficient, or whether traditional credit shelter trust planning offers additional advantages, should discuss the tradeoffs with their estate planning counsel, particularly as exemption amounts are subject to legislative change. Portability is one element of broader estate planning discussed at this level of wealth.