If no estate tax return is filed, which feature of the exemption is not permitted?

If no estate tax return is filed, which feature of the exemption is not permitted?

• A. Qdot
• B. Bypass Trust
• C. Portability
• D. Testamentary Trust

Answer: (C)

Portability of the estate tax exemption relies on making a specific election, which is done by filing an estate tax return for the first spouse to die (Form 706). Only when that return is filed can the unused portion of the deceased spouse’s exemption be transferred to the surviving spouse. If no estate tax return is filed, the election isn’t made, so the surviving spouse cannot use the other spouse’s unused exemption. That’s why portability is not permitted without filing. The other tools—QDOT for a noncitizen spouse, a bypass (credit shelter) trust, and a testamentary trust—are separate planning tools that don’t depend on making this portability election.

Portability of the estate tax exemption relies on making a specific election, which is done by filing an estate tax return for the first spouse to die (Form 706). Only when that return is filed can the unused portion of the deceased spouse’s exemption be transferred to the surviving spouse. If no estate tax return is filed, the election isn’t made, so the surviving spouse cannot use the other spouse’s unused exemption. That’s why portability is not permitted without filing. The other tools—QDOT for a noncitizen spouse, a bypass (credit shelter) trust, and a testamentary trust—are separate planning tools that don’t depend on making this portability election.