A couple has a gross estate of $9,000,000 and hold all of their assets jointly. The first spouse dies leaving a surviving spouse and the executor timely files the 706 Estate Tax return to elect portability. What is the amount of Deceased Spousal Unused Exclusion available to the surviving spouse?

A couple has a gross estate of $9,000,000 and hold all of their assets jointly. The first spouse dies leaving a surviving spouse and the executor timely files the 706 Estate Tax return to elect portability. What is the amount of Deceased Spousal Unused Exclusion available to the surviving spouse?

• A. The Estate Tax Marital Deduction available to S1
• B. The Basic Exclusion Amount of S1
• C. The Annual Exclusion amount of S1
• D. The Generation Skipping Transfer Tax Exemption of S1

Answer: (B)

Portability lets the surviving spouse use the portion of the deceased spouse’s exclusion that wasn’t used to shield the deceased’s estate. In this scenario, the first spouse dies with assets that all pass to the surviving spouse under the unlimited marital deduction, so none of the Basic Exclusion Amount is consumed by the first spouse’s estate. That means the entire Basic Exclusion Amount available at the time of the first spouse’s death remains unused and can be added as Deceased Spousal Unused Exclusion to the survivor’s own estate plan. So the amount available to the surviving spouse is the Basic Exclusion Amount applicable to the first spouse. The other options don’t describe DSUE: the marital deduction is a separate tax mechanism, the annual gift exclusion is for gifts during life, and the Generation Skipping Transfer Tax exemption is a different credit.

Portability lets the surviving spouse use the portion of the deceased spouse’s exclusion that wasn’t used to shield the deceased’s estate. In this scenario, the first spouse dies with assets that all pass to the surviving spouse under the unlimited marital deduction, so none of the Basic Exclusion Amount is consumed by the first spouse’s estate. That means the entire Basic Exclusion Amount available at the time of the first spouse’s death remains unused and can be added as Deceased Spousal Unused Exclusion to the survivor’s own estate plan. So the amount available to the surviving spouse is the Basic Exclusion Amount applicable to the first spouse.

The other options don’t describe DSUE: the marital deduction is a separate tax mechanism, the annual gift exclusion is for gifts during life, and the Generation Skipping Transfer Tax exemption is a different credit.