DECEASED SPOUSE’S UNUSED EXCLUSION AMOUNT (DSUE) – RON JACKSON
DECEASED SPOUSE’S UNUSED EXCLUSION AMOUNT
By: J Ronald “Ron” Jackson, MBA, CPA
In 2010 Congress amended section 2010 of the Internal Revenue Code to allow a surviving
spouse to add their deceased spouse’s unused exclusion amount (referred to as the DSUE and also
referred to as the portability amount) to their own federal estate tax exclusion amount. In order to
add the DSUE to the surviving spouse’s amount the law requires that the executor or administrator
(I) prepare and file a timely (within nine months after the decedent’s death) federal estate tax return
(form 706) with the Internal Revenue Service; (ii) the executor must compute the amount of the
DSUE; and (iii) the executor must elect portability for the surviving spouse. This DSUE can be very
valuable to the surviving spouse if there is any likelihood that the surviving spouse’s gross estate
value will be over their own individual federal estate tax exclusion amount.
Currently each individual has a basic exclusion amount of $10,000,000 as adjusted for
inflation since 12/31/2010. For 2023 the basic exclusion amount, as adjusted, for each individual
is $12,920,000. It may be less it the individual has utilized any of their individual exclusion amount
because of any taxable gifts they may have made since 1976. I will assume herein that no amount
of one’s basic federal estate tax exclusion has been utilized and the full amount is available at death.
If a deceased individual’s estate is lower than the amount required for filing a federal estate tax
return be filed, the entire exclusion amount of $12,920,000 could be added to the surviving spouse’s
exclusion amount so that the surviving spouse would have a total federal estate tax exclusion amount
of $25,840,000. Remember, to have the benefit of the DSUE, a federal estate tax return must be
filed and the DSUE amount computed and elected for portability whether a return is otherwise due
or not.
Even though no federal estate tax return may otherwise be due, the executor along with the
surviving spouse will want to consider carefully whether the benefit of adding the DSUE to the
surviving spouse could be of value if there is any reasonable belief that the surviving spouse’s gross
estate could be larger than the exclusion amount in future years. If Congress does not change
current law, the basic exclusion amount reduces back to $5,000,000, adjusted for inflation since
12/31/2010 effective on January 1, 2026. In order to preserve the DSUE for the surviving spouse
the executor only has to prepare and file within nine months after the decedent’s death a complete
federal estate tax return and make the election to allow portability to the surviving spouse. The costs
of preparation of a timely federal estate tax return, compute the DSUE and make the election could
prove very valuable to the surviving spouse’s estate if there appears to be any reasonable expectation
that the value of the survivor’s gross estate would be in excess of the then federal estate exclusion
amounts. Currently the federal estate tax rate for a taxable estate is 40% on the value of all assets
over the exclusion amount.