Portability (Estate Tax)

Definition

Portability is a federal estate tax provision that allows a surviving spouse to inherit and use any unused portion of their deceased spouse's federal estate tax exemption. This effectively lets a married couple combine their exemptions without requiring complex trust planning, though the deceased spouse's unused exemption (DSUE) must be elected on a timely filed estate tax return. CPAs must be aware that portability does not apply to the generation-skipping transfer tax exemption.