The $15 Million Decision Most Surviving Spouses Don't Know They Have to Make

A quiet $15 million is sitting on the kitchen counter

Every Florida widow or widower we meet is dealing with paperwork. Death certificates, beneficiary designations, retirement account rollovers, the bank, the mortgage, the alarm code. Buried somewhere in the pile is a tax deadline almost nobody warned them about. It looks like a return for an estate that does not owe any tax. It is technically optional. And if you skip it, you can quietly forfeit a federal estate tax exemption that, in 2026, is worth up to $15 million.

The election is called portability. The form is IRS Form 706. The election is made on a 706 that for many families would otherwise never be filed. And it is the single most important tax decision most surviving spouses never realized they had to make.

This article is for the white-collar Florida couple. The dual-physician household in Lake Mary. The retired airline captain in Heathrow. The partner in a mid-size Orlando firm and the spouse who runs the practice. The couple whose combined estate could realistically grow past $15 million during the surviving spouse's lifetime, especially if the bull market keeps doing what bull markets do. If that is you, read on.

What portability actually is

Federal estate tax is a tax on what you leave behind. Each individual gets a unified credit, also called an exemption, which shelters a set amount from estate and gift tax. In 2026, after the One Big Beautiful Bill Act made the higher exemption permanent, that figure is $15 million per person, $30 million for a married couple, indexed annually thereafter.

Portability is the rule, codified at IRC Section 2010(c)(4) and (5), that says when one spouse dies and does not use up their full exemption, the unused portion can be transferred to the surviving spouse. The unused amount has a name: the Deceased Spousal Unused Exclusion, or DSUE. The surviving spouse can stack the DSUE on top of their own exemption.

Here is the part that bites people. Portability is not automatic. The executor of the first-to-die spouse must affirmatively elect portability on a properly and timely filed Form 706. No election, no DSUE, no doubled exemption.

A real Florida example

Consider Dr. Hartwell, a retired cardiologist in Heathrow. He passed away in 2024. His estate was about $7 million, mostly his retirement plan, the house, and a brokerage account. He left everything to his wife. Because of the unlimited marital deduction, no federal estate tax was owed. The family looked at the 706, which is roughly forty pages of unfun, and decided to skip it. The probate attorney did not push back.

Mrs. Hartwell continued investing successfully. By the time she passes, even on conservative assumptions, her estate is on track to be in the $20 million range, helped along by the family business interest she retained and an aggressive equity portfolio.

Without portability, her estate gets one $15 million exemption, indexed for inflation. Anything above that is taxed at 40%. We are talking about a federal estate tax bill that could exceed $2 million, on top of probate costs.

With portability, her estate gets her own roughly $15 million plus Dr. Hartwell's full $15 million DSUE, which is locked in at his date-of-death exemption value. Federal estate tax bill: zero.

The difference is the cost of one Form 706 filed in time. We have run this math at the kitchen table more times than I can count, and the response is always the same. "Why did nobody tell us?"

The deadline most people miss

The standard rule under IRC Section 2010 is that Form 706 is due nine months after the date of death, extendable to fifteen months. Miss that and a regular 706 is late.

The IRS, recognizing how many surviving spouses miss this entirely, gave a real lifeline in Rev. Proc. 2022-32. If the only reason you would file a 706 is to elect portability, you have up to five years from the date of death to file a late 706 and still elect portability under a simplified procedure. No private letter ruling, no fee.

Five years sounds like plenty until you realize how fast the clock moves while a surviving spouse is grieving, downsizing, and managing the rest of life. We see families come in at year four with a stack of statements and a question about a small Roth conversion, and we discover the much bigger conversation is the portability deadline that is six months away.

When portability is not the right answer

Portability is the easy button, but it is not always the best button. Three situations call for a closer look.

Generation-skipping transfer (GST) tax exemption is not portable. If grandparents want to leave significant wealth to grandchildren or to a long-term dynasty trust, the deceased spouse's GST exemption can only be preserved by funding a credit shelter trust at the first death. Skip the trust, rely on portability alone, and the GST exemption dies with the first spouse.

Asset growth is the second issue. The DSUE is locked in at the deceased spouse's exemption value. Future growth on those assets, if they pass to the surviving spouse outright, is subject to estate tax in the survivor's estate. A credit shelter trust funded at the first death can capture future appreciation outside the survivor's taxable estate. For families with serious growth assets, that difference is real money.

Creditor protection is the third issue. Outright inheritance by a surviving spouse is exposed to that spouse's future creditors, future second marriage, and future planning judgments. A trust at the first death gives the family meaningful protection on all three fronts.

For most Florida professional couples between $5 million and $15 million in combined assets, portability alone is often the right call because it is simple, predictable, and free. For couples north of $15 million, or with serious GST goals, the conversation gets more interesting fast. We model both options before recommending one.

Florida-specific wrinkles

Florida does not impose its own estate tax, so the 706 is purely a federal exercise here. That actually makes Florida a relatively friendly venue for portability planning, since you do not need to worry about coordinating with a separate Florida estate tax election the way clients in some other states do.

Florida's homestead rules can interact in unexpected ways with the marital deduction, especially when there are descendants from a prior marriage. We see this come up in blended families where the homestead does not pass cleanly to the surviving spouse. That can affect both the marital deduction and the DSUE calculation. It is one more reason the first-spouse 706 is best done with a Florida attorney who has seen those issues at probate.

The bigger Florida point is opportunity cost. Without a state estate tax, every dollar of saved federal estate tax stays in the family. Filing the 706 is not just a federal compliance exercise. It is the gateway to a tax savings that, in Florida, is yours to keep.

Frequently Asked Questions

My spouse passed away three years ago and I never filed a Form 706. Is it too late?

Probably not. Under Rev. Proc. 2022-32, if the only reason for the filing is to elect portability, you have five years from the date of death. Bring us the death certificate, the will, and a list of assets, and we can usually get a complete 706 filed in 60 to 90 days.

Does our combined estate really need to exceed $30 million for portability to matter?

No. Asset growth between now and the second death is the issue. A surviving spouse with $5 million today and a long life expectancy can easily land north of $15 million by the time the second death occurs, especially with appreciated stock, real estate, or a business interest.

Can I just create a trust at the first death and skip portability?

Sometimes that is the better answer, especially for GST planning, asset protection, and capturing future appreciation outside the survivor's estate. A funded credit shelter trust at the first death and a portability election are not mutually exclusive in every case, but they involve real trade-offs we model before recommending.

What is involved in actually filing the 706 just for portability?

Less than a full 706 because the regulations under Treas. Reg. 20.2010-2 allow simplified valuations for certain marital deduction property. You still document everything carefully, but the project is leaner than a tax-due 706.

How much does this cost?

Far less than the tax it can save. The 706 itself is a multi-thousand-dollar engagement depending on complexity. The avoided estate tax, in the example above, can run seven figures. Of all the planning conversations we have, this is the one where the math is most one-sided.

Call Our Office

If your spouse passed away in the last five years and no one has talked to you about a Form 706 portability filing, that is the conversation we want to have this month. Call our office at (407) 843-0430 or visit orlandoprobatelawyer.com to schedule a portability review. David A. Yergey III, our lead attorney, holds an LL.M. in Taxation from the University of Miami and has spent his career on exactly this kind of planning. We have been helping Orlando families since 1928, and we will tell you, in plain numbers, what is at stake and how to lock in the savings before the deadline closes.