We always recommend obtaining guidance from a licensed California estate planning attorney before finalizing wills, trusts, or estate plans. This is especially critical if the value of your estate’s assets exceeds the amount covered by current tax laws.
Learning as much as you can about the Deceased Spousal Unused Exclusion (DSUE) for estate taxes—and the potential for portability—can save you or your spouse millions of dollars in unnecessary taxes. However, spouse estate tax portability is not automatic, which is why you should always work with a licensed, Bay Area estate planning attorney who can ensure your future plans protect—rather than expose—your assets.
ℹ️ WHAT PORTABILITY COULD SAVE YOU
In 2025, portability (DSUE) allows a surviving spouse to inherit up to $13.99 million in unused estate tax exemption from their deceased spouse.
- Combined exemption for married couples: Up to $27.98 million tax-free
- Potential tax savings: Millions of dollars in federal estate taxes avoided
- The catch: It’s not automatic—you must file the correct forms
Missing the filing deadline could cost your family millions.
Federal Estate Tax Portability or DSUE Explained
Each U.S. citizen has a federal estate and gift tax exclusion amount, which is a specific value of assets that can be transferred during life or at death without incurring estate or gift taxes. In addition to that, the IRS allows a surviving spouse to use any unused portion of their spouse’s estate tax exemption, called the Deceased Spousal Unused Exclusion (DSUE), which can significantly alter the amount you can be taxed. This unused portion is considered “portable” since it migrates from the deceased spouse to the surviving spouse.
Each year, Congress passes laws determining the value of inheritable taxes that are tax-exempt. This means that people can inherit assets up to a certain amount before being taxed. According to the IRS, this figure has steadily increased each year since 2011. In 2025, the estate tax exemption is set just shy of $14 million at $13,990,000 per individual, but there is talk that Congress plans to reduce that value significantly, which is why time is of the essence.
Using the 2025 figures, let’s say your spouse previously inherited $5,990,000 and filed the correct forms to make that income tax exempt. When they died this year, they still had $8,000,000 of their tax exemption left. Now, that amount can be transferred to you, meaning your estate tax exemption goes from $13,990,000 to $21,000,000, which significantly diminishes estate tax liability on current or future inheritances or gifts.
California Does Not Impose a State Estate Tax
Currently, California does not impose a state estate tax. So, if you are a California resident, you will not be taxed on inheritances. That means that portability (DSUE) for estate tax only affects Californians when they file their federal taxes.
The Portable DSUE Is Not Automatic
Estate tax exemptions are not automatic and typically require heirs or beneficiaries—including spouses—to file estate tax-specific documents. If your spouse dies, you must file a U.S. Estate, Gift, and Generation-Skipping estate tax return (Form 706) must be filed if the gross estate of the decedent (who is a U.S. citizen or resident), increased by the decedent’s adjusted taxable gifts and specific gift tax exemption, is valued at more than the filing threshold for the year of the decedent’s death.
Timing for filing can vary depending on your situation, and there are typically fees associated with filing for portability—mostly estate-planning attorney and tax-filing fees. However, these fees are well worth the tax benefits.
⚠️ CRITICAL: PORTABILITY REQUIRES FORM 706
Even if your spouse’s estate is below the filing threshold, you MUST file IRS Form 706 to claim portability. Missing this step means the unused exemption disappears forever—potentially costing your heirs millions in avoidable estate taxes. Form 706 has strict deadlines (typically 9 months after death, with possible extensions). This is not a DIY situation. Work with an experienced estate planning attorney and tax professional to ensure proper filing and preserve your DSUE benefit.
Limitations of Spouse Estate Tax Exemption Portability
There are certain limitations associated with portability, especially for more complex estates.
For example:
Assets with high appreciation may push you over the limit. For more comprehensive estates, certain assets may exceed the DSUE limitations, leaving you vulnerable to taxes and fees (or penalties if not handled correctly). In this case, your estate lawyer or financial planner may use other creative strategies for tax shielding purposes.
State taxes could be levied if you relocate. We mentioned above that California doesn’t have estate taxes. However, other states do. Currently, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington, and Washington D.C. implement estate taxes. These are worth considering as you look ahead to where you want to live. Also, if your spouse dies, you’ll want to consider tax implications if there is any chance of you relocating to another state until the estate is completely settled.
The GST is exempt from portability. The generation-skipping transfer (GST) tax is not portable between spouses.
You can only take advantage of DSUE portability one time. While you can take advantage of one deceased spouse’s remaining estate tax exemption, it is a one-time only tax benefit. If you leveraged portability from your previous deceased spouse, you cannot accumulate more estate tax exemptions from successive deceased spouses.
🎯 PROTECT YOUR ESTATE FROM UNNECESSARY TAXES
The more complex your estate, the more critical proper planning becomes. Tseng Law Firm specializes in sophisticated estate tax strategies, including DSUE portability, bypass trusts, and advanced tax-minimization techniques. Our Bay Area estate planning attorneys will analyze your situation, explain your options, and create a plan that maximizes tax benefits for you and your heirs.
Schedule a Consult with Tseng Law Firm To Leverage Portability to Your Advantage
The more comprehensive your estate, the more complex the planning process is. That requires astute strategizing by an experienced estate planning attorney.
Schedule an estate tax planning session with Tseng Law Firm to learn more about portability (DSUE) for estate tax planning and what you need to know.