Portability of the Deceased Spousal Unused Exemption (DSUE) is a tax concept that allows the surviving spouse to use any unused portion of the deceased spouse's estate tax exemption. Essentially, if the estate of the first spouse to die does not use up their full estate tax exemption, the unused portion can be transferred to the surviving spouse and used to reduce the estate tax liability of their estate. This is an important consideration for many married couples who have accumulated significant assets over their lifetimes.
The concept of portability of the Deceased Spousal Unused Exemption became law in 2011 with the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act. Prior to this, any unused portion of an estate tax exemption would be lost upon the death of the first spouse. The introduction of portability allowed for greater flexibility in estate tax planning, particularly for couples with large estates.
Portability of the DSUE is particularly relevant to IRS Form 706, which is used to calculate estate tax and report on the estate's assets, deductions, and distributions. If a couple wishes to make use of portability, the executor of the estate of the first spouse to die must file Form 706 within nine months of the date of death, even if no estate tax is due. The IRS uses the information on this form to calculate the unused portion of the estate tax exemption that can be transferred to the surviving spouse.
Overall, portability of the Deceased Spousal Unused Exemption is an important consideration for many married couples with significant assets. It allows for greater flexibility in estate tax planning and can help to reduce the overall tax liability of a couple's estate. Understanding how portability relates to IRS Form 706 is an important step in ensuring that couples can make the most of this valuable tax benefit.
Sample Form 706
- In the intake, answer the questions in the
IRS Form 706 (optional)section.
- For every beneficiary and executor, if the
IRS Form 706 (optional)section appears, answer the questions within it.
- For every asset and liability added, answer the questions in the
IRS Form 706 (optional)section. For a liability to show up in the right sub-section of
Schedule K, our secure loan feature must be used.
- Add estate accounting transactions as usual. Note that the
Descriptionfield of the transaction will be rendered on
- Generate the main IRS Form 706. If any of Schedules G, H, L, P, Q, R, or U are required, they must be filled in manually by the user after generation. However, the totals of these Schedules must be entered on the intake for the final calculations to work as expected.
- If any of the pre-filled schedules includes an amount in the
Continuation Schedulesrow, generate an
IRS Form 706 - Continuation Schedulefor every continuation with the appropriate schedule selected.
Mapping of Schedules
|A||Real Estate||✅||- Real Estate (not jointly owned)|
|A-1||Section 2032A Valuation||❌|
|B||Stocks and Bonds||✅||- Holdings from Deceased Investment Account (not jointly owned)|
|C||Mortgages, Notes, and Cash||✅||- Loan Due To Deceased (not jointly owned) - Cash on Hand (not jointly owned) - Deceased Bank Account (not jointly owned)|
|D||Insurance on the Decedent’s Life||✅||- Life Insurance Proceeds (not jointly owned)|
|E||Jointly Owned Property||✅||All jointly owned assets from: - Holdings from Deceased Investment Account - Real Estate - Stake in Private Companies - Life Insurance Proceeds - Deceased Bank Account - Cash on Hand - Loan Due To Deceased|
|F||Other Miscellaneous Property||✅||- Other Asset - Stake in Private Companies (not jointly owned) - Personal Effects and Household - Collectables (if total > $3,000)|
|G||Transfers During Decedent’s Life||❌|
|H||Powers of Appointment||❌|
|I||Annuities||✅||- Income Receivable|
|J||Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims||✅||Accounting Disbursements of types - Funeral Expense - Executor Fees - Legal Fees - Professional Fees - Estate Expense - Executor Loan Interest - Interest and Bank Charges - Investment Fees|
|K||Debts of the Decedent, Mortgages and Liens||✅||- All liabilities|
|L||Net Losses During Administration and Expenses Incurred in Administering Property Not Subject to Claims||❌|
|M||Bequests, etc., to Surviving Spouse||✅||- All assets marked as qualifiable for marital deduction|
|O||Charitable, Public, and Similar Gifts and Bequests||✅||All beneficiaries of type Charity/Legal Person, summing up - Their cash bequest value - Their non-cash bequest value - Their interest in the residue|
|P||Credit for Foreign Death Taxes||❌|
|Q||Credit for Tax on Prior Transfers||❌|
|R||Generation-Skipping Transfer Tax||❌|
|U||Qualified Conservation Easement Exclusion||❌|