Beginning in 2011, surviving spouses who want to elect to make use of their deceased spouse's unused estate tax exemption must timely file Form 706 for their deceased spouse's estate. This is commonly referred to as "portability of the estate tax exemption."
Who must file Form 706? According to the official instructions for the 2013 version of Form 706, "For decedents dying in 2013, Form 706 must be filed by the executor for the estate of every U.S. citizen or resident:
- Whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $5,25,000; or
- Whose executor wants to make the election to permit the decedent’s surviving spouse to use the decedent’s unused exclusion amount, regardless of the size of the decedent’s gross estate." (In other words, the executor wants to make the portability election for the benefit of a surviving spouse even if the value of the deceased spouse's estate is less than $5,250,000.)
What about deaths occurring in years other than 2013? View my Exemption From Federal Estate Taxes: 1997 - 2014 chart to determine the estate tax exemption for the applicable year of the decedent's death and then substitute the corresponding exemption for $5,250,000 above.
To determine whether you must file a return for an estate, add:
- The adjusted taxable gifts (as defined in Section 2503) made by the decedent after December 31, 1976;
- The total specific exemption allowed under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) for gifts made by the decedent after September 8, 1976; and
- The decedent’s gross estate valued at the date of death."