Understanding Estate Tax Benefits for Married Couples
Vault Estate Planning | www.vaultestateplanning.com
When planning your estate as a married couple, there are two powerful tools that can help you reduce or eliminate federal estate taxes: Portability and the Unlimited Marital Deduction. These two concepts can make a huge difference in how much of your wealth you’re able to pass on to your loved ones—without paying a cent in estate taxes.
At Vault Estate Planning, we help families use these strategies to protect their assets, reduce taxes, and create peace of mind for generations to come. Let’s break these concepts down in a way that’s easy to understand.
🔹 What Is the Unlimited Marital Deduction?
The Unlimited Marital Deduction is a special rule in the federal tax code that allows married couples to pass an unlimited amount of assets to each other—completely tax-free—either during their lifetime or after death.
✅ What It Means:
If one spouse passes away, they can leave any amount of money or property to the surviving spouse without incurring any estate tax, no matter how large the estate is.
📘 Example:
Let’s say John passes away and leaves his entire $10 million estate to his wife, Maria.
Even though $10 million is well over the individual estate tax exemption limit, Maria owes $0 in estate taxes—because of the unlimited marital deduction.
✅ Key Requirements:
- The couple must be legally married.
- The recipient spouse must be a U.S. citizen.
(If not, a special type of trust called a QDOT—Qualified Domestic Trust—must be used.)
🔹 What Is Portability?
Portability allows the surviving spouse to “inherit” the unused federal estate tax exemption from the spouse who has passed away.
✅ What It Means:
If the first spouse dies and doesn’t use their full estate tax exemption, the unused amount can be transferred to the surviving spouse, increasing their exemption when they pass away.
📘 Example:
- In 2025, the federal estate tax exemption is $13.99 million per person.
- Suppose Jane dies and uses only $5 million of her exemption.
- The remaining $8.99 million can be transferred to her spouse, Mike, using portability.
- Now, when Mike dies, he has his own $13.99 million exemption PLUS Jane’s $8.99 million, giving him a combined exemption of $22.98 million.
✅ Key Requirements:
- You must file IRS Form 706 (the federal estate tax return) within 9 months of the first spouse’s death (an extension is available).
- Portability is not automatic—you must elect it by filing the proper form, even if no tax is due.
🔍 Why These Tools Matter in Estate Planning
Together, portability and the unlimited marital deduction allow married couples to pass on significant wealth without losing it to estate taxes.
Here’s how they work together:
- When the first spouse dies, all assets can pass to the surviving spouse tax-free using the unlimited marital deduction.
- If the surviving spouse elects portability, they can add the unused exemption from their spouse to their own.
- When the surviving spouse dies, their estate can use a much higher exemption amount, potentially avoiding estate tax entirely.
💡 Simple Case Study: No Planning vs. Using Portability
Without Portability:
- John dies in 2025 with an estate worth $10 million. He leaves everything to his wife, Linda.
- The unlimited marital deduction applies—no estate taxes now.
- Linda dies later with a $20 million estate. She only has her $13.99 million exemption, so $6.01 million is taxable.
- Estate tax owed: Over $2.4 million.
With Portability:
- Same situation, but this time Linda files Form 706 after John’s death and claims his unused exemption.
- Now, Linda has $13.99M (hers) + $13.99M (John’s) = $27.98M exemption.
- Her $20 million estate is fully exempt from estate tax.
- Estate tax owed: $0.
🛑 Common Mistakes to Avoid
❌ Assuming it’s automatic – Portability must be elected with a timely IRS filing.
❌ Not filing Form 706 – Even if no estate tax is owed at the first spouse’s death, this form must be filed to preserve portability.
❌ Relying solely on the marital deduction – Leaving everything to your spouse may avoid taxes now, but without proper planning, estate taxes could hit hard later.
❌ Ignoring changing exemption limits – The current exemption is historically high, but it could drop significantly in the future. Planning now is essential.
✔️ How Vault Estate Planning Can Help
At Vault Estate Planning, we help married couples:
- ✅ Maximize tax savings using the unlimited marital deduction
- ✅ Properly file for portability after the first spouse’s death
- ✅ Structure estate plans that protect your assets for multiple generations
- ✅ Use trusts and tax strategies to avoid surprises and reduce risk
Whether you’re just starting your estate plan or reviewing it after a spouse’s passing, our team will guide you every step of the way to make sure you and your loved ones are protected.
📞 Start Your Estate Planning Conversation Today
Don’t leave your family’s future to chance—or to the IRS. Take advantage of the tools the law gives you to protect your wealth and pass it on the smart way.
Vault Estate Planning — Helping families preserve what matters most.
