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This is a question about the federal estate tax in the United States.

Suppose a married man died in (let's say) 2021, when the estate tax exemption was $11.7 million. He leaves his entire estate to his wife taxfree. She dies in 2023, when the exemption is (say for simplicity) still $11.7 million. When the wife dies, she is entitled to both his and her exemptions, for a total of $23.4 million.

Now suppose instead that the man dies in 2021, leaving everything to his wife taxfree, and that she dies in 2026, after the exemption reverts to $5 million.

Once again, she is entitled to both exemptions. Does her total exemption amount to $11.7 million plus $5 million, or does it amount to $5 million plus $5 million? In other words, is the value of the ported exemption equal to the value of an exemption at the time of the first spouse's death or at the time of the second spouse's death?

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  • I believe she would have to file for/claim his remaining exemption when he dies, not later when she dies. Or at least when filing their tax return the year he died. If she waits until she dies before claiming it, she will only get her own exemption. But I don't have the sources on-hand to back this up (will convert to answer if I find them, or delete if I am spreading misinformation)
    – yoozer8
    Jun 24, 2022 at 20:41
  • @yoozer8: But this doesn't really answer my question. Suppose she claims the exemption when her husband dies. At that time the exemption is 11.7 million. She dies in 2026, when the exemption is 5 million. At that point, is the exemption she claimed from her husband worth 11.7 million or 5 million?
    – WillO
    Jun 24, 2022 at 20:42
  • It's currently $10m plus inflation from 2010 = $11.7m for 2021, and if current law is unchanged will revert in 2026 to $5m plus inflation from 2010 which is not yet known but I have seen estimates of $6.2m. See 26USC2010(c)(3).
    – dave_thompson_085
    Jun 26, 2022 at 2:31

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The estate will be subject to the law at place at the time estate became to exist. I.e.: it will be subject to the law that was in place when she died.

We don't know what will happen until 2026. The power balance in the US may shift in any direction by then multiple times. There are at least two election cycles until then - 2022 and 2024. The Congress may decide to let the sunset happen, or extend it, or make the current state permanent, or make any other change.

Assuming that the sunset happens, if she applies for her husband's exemption now - she'll have the 11.7M exemption. If she then passes after the sunset - she'll have the additional 5M exemption of her own.

The portability election must be made on the timely filed estate tax return of the first deceased spouse.

See Form 706 Part 6 Section D.

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  • Thank you. I do realize that laws can change, and intended to make the assumption that there is no new legislation between now and 2026 (so that the sunset occurs as scheduled). I'll follow your link now.
    – WillO
    Jun 25, 2022 at 0:37
  • Looking at Form 706, I see that you are right. Thank you.
    – WillO
    Jun 25, 2022 at 1:49

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