Question: Your client’s spouse, a U.S. citizen, passed away in February 2022. The deceased spouse’s gross estate is estimated to be valued around $4 or $5 million, which is under the current exclusion amount ($12.06 million for decedents passing in 2022). You are aware that the basic exclusion amount is set to return to $5 million (adjusted for inflation) for tax years beginning on or after Jan. 1, 2026. Therefore, you want to recommend that the surviving spouse file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, to transfer the deceased spouse’s unused exclusion (DSUE) amount to the surviving spouse (i.e., to make a portability election). Form 706 is a long, complicated form, with six distinct parts in the body, and more than a dozen accompanying Schedules that may be required. If the surviving spouse is only filing Form 706 to elect portability, must the entire form (plus schedules) be completed?
Answer: Generally, yes. However, regulations provide some relief for estates that are electing to transfer DSUE and are not otherwise required to file Form 706 because they are below the filing threshold.
Under Reg. §20.2010-2(a)(7), executors of estates not otherwise required to file Form 706 will not need to report the value of property qualifying for the marital or charitable deduction. Such executors can instead estimate the total value of the property eligible for the marital or charitable deduction. This estimate must be based on good faith, and due diligence must be exercised in determining the value of all assets includable in the gross estate.
Property qualifying for this simplified reporting is listed and described on the appropriate schedule of Form 706. However, a specific dollar value is not reported either on the schedule or on Lines 1 through 9 of the recapitulation in Form 706, Part 5. The total estimated value of these assets is reported on Form 706, Part 5, Lines 10 and 23, based on a range of dollar values provided in the Form 706 instructions.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.