Most people hear that the federal estate tax exemption is now incredibly high and assume estate tax planning no longer matters. After all, with today’s rules, a married couple can potentially shield roughly $30 million from federal estate tax.
That sounds like a “rich people problem,” right? Maybe not.
Because one overlooked election—often ignored by families who believe they’ll never need it—can become costly later. And once the opportunity is missed, there’s no easy undo button.
The Tax Rule Most Families Have Never Heard Of
It’s called the estate portability election. The name sounds technical. The concept is pretty simple.
When one spouse passes away, any unused portion of that spouse’s federal estate tax exemption can potentially transfer to the surviving spouse.
In plain English: If the first spouse doesn’t use all of their exemption, the surviving spouse may be able to use both. That’s a very big deal.
“But We’re Not Wealthy…”
That’s exactly why many families miss this opportunity. At the time of the first spouse’s death, the estate may seem nowhere near estate tax territory. Maybe there’s:
- A home
- Retirement accounts
- Some investments
- A family business
- Life insurance
Nothing that feels “ultra wealthy.” So the family skips filing the paperwork because it appears unnecessary. That can become a very expensive assumption.
How Things Change Fast
Imagine this scenario: A husband passes away with a modest estate, well below today’s exemption limits. His executor decides not to bother with the portability election because “there’s no estate tax issue.”
A year later, his surviving spouse cashes out stock from a startup investment that unexpectedly skyrocketed in value. Suddenly, the estate that once looked ordinary becomes worth many millions.
Without the portability election? A significant portion of that growth could become exposed to estate tax. With it? The surviving spouse may have millions of dollars in additional protection available.
That one filing decision can literally change the tax outcome by millions.
The Bigger Risk Nobody Talks About
Today’s estate tax exemptions are historically generous. But tax laws change. Congress changes. Economic conditions change. And future lawmakers can reduce exemption amounts at any time.
That means families who are comfortably below today’s thresholds may not be below tomorrow’s.
Which is why estate professionals often view portability as less about your wealth today and more about protecting flexibility for the future.
The Cost of Missing It
Here’s the part that catches families off guard: This election is not automatic. The executor generally must file a federal estate tax return—even when no estate tax is due—to preserve the unused exemption for the surviving spouse. Miss the filing window or submit it incorrectly, and the opportunity can disappear.
In one recent court case, a family lost the ability to use a deceased spouse’s unused exemption because the required filing wasn’t properly completed on time. The result? An additional estate tax bill of roughly $1.5 million.
Not because the family failed to plan entirely…but because they assumed the election wasn’t important.
Why This Matters More Than Ever
Many people think estate planning is only about the ultra-wealthy.
In reality, modern estate planning is often about:
- Preserving options
- Protecting future growth
- Preparing for changing tax laws
- Avoiding irreversible mistakes
And portability sits quietly at the center of all four.
Final Thought
The portability election is one of those rare tax strategies that can become incredibly valuable long after the original decision is made. At the moment, it may feel unnecessary. Years later, it may turn out to be one of the most important tax filings your family ever made.
Because sometimes, the most expensive estate tax mistakes don’t come from failing to have wealth…They come from failing to plan for what wealth could become.
For assistance with tax planning strategies, contact Saunders Tax & Accounting at http://www.saunderstax.com or call us at 301-714-2071. Open Monday – Thursday, 9 am to 5 pm. Awarded the Hagerstown Hot List 2026 and Hagerstown Chamber of Commerce “2023 Small Business of the Year” by providing a Less Taxing Life and More Prosperous Solutions since 1984!
