IRS Simplifies Method for Obtaining an Extension of Time to Make a Portability Election for Federal Estate Tax Purposes

On July 8, 2022, the IRS issued Revenue Procedure 2022-32 which provides a simplified way for certain estates to obtain an extension of time to make a “portability election”. Each individual is allowed to pass a certain amount of property to non-spousal and non-charitable beneficiaries without triggering the federal estate tax. For estates of decedents dying in 2022, this exemption amount totals $12,060,000. If a person leaves his or her entire estate to his or her spouse, the exemption amount is unused because any amounts passing to a surviving spouse are not subject to estate tax due to the “unlimited marital deduction”. By making a timely “portability election”, the deceased spouse’s unused exemption (DSUE) amount becomes available in the Estate of the surviving spouse, thereby allowing the survivor to pass up to $24,120,000 (in 2022) to non-spousal and non-charitable beneficiaries (e.g., children and grandchildren) without triggering the federal estate tax.

Revenue Procedure 2022-32 applies to estates where:

• the decedent died after Dec. 31, 2010;
• the decedent was survived by a spouse;
• the decedent was a citizen or resident of the United States on the date of death; and
• the estate is not required to file an estate tax return based on the value of the gross estate, and the executor did not file an estate tax return within the time required under the Treasury regulations. 

To receive the extension of time to make the portability election:

• a complete and properly prepared IRS Form 706 must be filed on or before the fifth anniversary of the decedent’s death; and
• across the top of the IRS Form 706 it must state that the return is “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”

On Dec. 31, 2025, the current rules governing the federal estate tax exemption are set to expire. Unless a future Congress and president extend the current rules past that date, the federal estate tax exemption amount will revert to the level it was at in 2017 adjusted for inflation (estimated to be between $6.2 million and $6.5 million per individual). The potential reduction of a surviving spouse’s federal estate tax exemption makes electing portability all the more important. Surviving spouses should review their estate planning documents with their attorneys and discuss the portability election as a way to maximize the amount that may pass free of federal estate tax in their estates.

If you have questions or would like additional information, please contact your personal AT attorney or one of the authors listed below.