How to Elect Portability on Form 706 for a Montana Surviving Spouse

If your spouse died in Montana and no one has mentioned the portability election, there is a critical federal estate tax benefit you may be about to lose permanently. The portability election allows a surviving spouse to claim the deceased spouse's unused federal estate tax exemption — effectively doubling the surviving spouse's own exemption for their future estate. In 2025, the federal exemption is $13.99 million per person. Filing Form 706 to elect portability can preserve up to $13.99 million of additional estate tax shelter for the surviving spouse's estate. The election is not automatic. It requires filing IRS Form 706 within nine months of the date of death — or within five years under a special IRS procedure for late filers. Montana has no state estate tax, so this is entirely a federal benefit, but it is real, and missing the deadline forfeits it permanently.

This page explains who should consider the portability election, how to make it, the extended deadline available under Revenue Procedure 2022-32, and when a Montana-specific estate guide handles the information you need versus when a CPA is warranted.

What Is Portability?

When a married person dies, their unused federal estate tax exemption — the amount of their exemption they did not use during lifetime — does not automatically carry over to their surviving spouse. Without portability, the exemption is simply lost.

Portability is the mechanism that allows the surviving spouse to capture and use the deceased spouse's unused exclusion amount (DSUE). By making the portability election, the surviving spouse effectively adds the deceased spouse's unused exemption to their own. If the deceased spouse used none of their exemption, the surviving spouse could potentially shield up to $27.98 million from federal estate tax when they die (their own $13.99 million plus the deceased spouse's full $13.99 million — 2025 figures).

In 2026, the exemption increases to $15 million per person, meaning a surviving spouse who made the portability election could shield up to $30 million in combined exemption.

Why Portability Matters Even When No Estate Tax Is Currently Owed

Most Montana estates are far below the $13.99 million threshold that triggers federal estate tax today. The confusion that causes families to miss the portability election: they assume that because no estate tax is owed on the first spouse's death, Form 706 is not needed. That assumption costs surviving spouses the portability benefit.

The portability election must be made by filing Form 706 — even if no tax is owed. There is no other way to make the election. The IRS does not automatically transfer the DSUE to the surviving spouse. If Form 706 is not filed, the DSUE is lost.

Scenarios where portability matters significantly for Montana estates:

• The surviving spouse's own assets plus anticipated inheritances or appreciating real estate could eventually push their estate above the exemption threshold
• Montana ranch land, agricultural property, or commercial real estate is appreciating significantly over time
• The surviving spouse is relatively young and has decades of asset accumulation ahead
• The surviving spouse expects to receive life insurance proceeds, pension distributions, or IRA assets that will increase their estate value
• Congress is discussing changes to the estate tax exemption — the current high exemptions are scheduled to sunset at the end of 2025 without legislation, potentially reverting to approximately $7 million adjusted for inflation

Even for surviving spouses whose estates appear modest today, protecting the DSUE amount is a zero-downside benefit for the estate that is under the threshold.

The Standard Deadline and the Five-Year Extension

The standard deadline to elect portability is nine months from the date of death. A six-month automatic extension of time to file Form 706 is available, moving the deadline to fifteen months.

Revenue Procedure 2022-32 extended relief dramatically. Under this procedure, estates that are not otherwise required to file Form 706 (because the gross estate does not exceed the filing threshold) can file a late portability election up to five years after the date of death. This extension applies specifically to the portability election — it does not extend the deadline for estates that owe actual estate tax.

To use Revenue Procedure 2022-32:

• The estate must not have been required to file Form 706 based on the gross estate value
• The executor must include specific language at the top of Form 706 citing Revenue Procedure 2022-32
• The return must be filed within five years of the date of death

If more than five years have passed since the date of death, the portability election opportunity is permanently closed.

Revenue Procedure 2026-17 provides additional relief for specific elections made in tax years 2022, 2023, or 2024, allowing amended returns or administrative adjustment requests to be filed by October 15, 2026, or the applicable statute of limitations deadline.

How to File Form 706 for Portability in Montana

Montana has no state estate tax and no state-level clearance requirement for deaths occurring after December 31, 2004. The portability election is purely a federal filing:

Step 1: Obtain the estate's EIN. Form 706 is filed under the estate's Employer Identification Number, not the decedent's Social Security Number. Apply free through the IRS online EIN system.

Step 2: Determine gross estate value. Form 706 requires reporting the fair market value of all assets at the date of death. For estates filing solely for portability, the IRS permits a simplified valuation method — you do not need formal professional appraisals of every asset. Assets may be reported using a good-faith estimate of fair market value, provided they pass entirely to the surviving spouse or charity.

Step 3: Complete Form 706. The form requires the decedent's identifying information, a schedule of all assets and their values, and Part 6 (the portability election section). The executor must include the statement that an election is being made to allow the surviving spouse to use the DSUE amount.

Step 4: If filing late under Rev. Proc. 2022-32. Include the following statement at the top of Form 706: "FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)." This statement is required. Without it, the IRS may not recognize the return as a timely late portability election.

Step 5: File with the IRS. Form 706 is filed with the IRS; there is no Montana Department of Revenue filing involved for portability purposes. Mail or submit through the address listed in the current Form 706 instructions.

Portability and the Montana Separate Property Framework

Montana operates as a separate property state, meaning spouses generally own assets individually unless titled jointly. For portability purposes, this matters in a specific way: the deceased spouse's DSUE is calculated based on the deceased spouse's unused exemption at death. If the deceased spouse made significant lifetime gifts that consumed part of their exemption, the DSUE is correspondingly reduced.

Montana's adoption of the Uniform Disposition of Community Property Rights at Death Act (MCA 72-9-101) creates a separate interaction with portability for couples who relocated from community property states. If the couple's assets qualify as community property under this Act, the surviving spouse may benefit from a double step-up in basis — both halves of community assets are adjusted to fair market value at death. This does not affect the portability election mechanics, but it affects whether the surviving spouse needs the DSUE as urgently (if appreciated community assets already receive a full step-up, the surviving estate's future capital gains exposure is reduced).

When a CPA Is Warranted for the Form 706 Portability Election

For most Montana estates filing solely for portability, Form 706 is manageable without a CPA: the simplified valuation method reduces the documentation burden, and the portability election section of the form is relatively straightforward. A CPA is warranted when:

• The estate's gross value is uncertain and professional appraisals may be needed for business interests, significant real estate, or unique assets
• The decedent made substantial lifetime gifts that consumed part of their exemption, requiring the DSUE calculation to account for those prior gifts
• The couple previously lived in a community property state and the Uniform Disposition of Community Property Rights at Death Act may affect asset characterization on Form 706
• The executor is uncertain whether the five-year Rev. Proc. 2022-32 window is still open and needs professional confirmation before filing

The Montana Final Tax & Estate Tax Guide and Portability

The Montana Final Tax & Estate Tax Guide includes a dedicated chapter on federal estate tax and portability mechanics — specifically for Montana estates where no federal estate tax is owed but the portability election remains valuable. It covers:

• The DSUE amount and how it is calculated
• The standard nine-month deadline and the automatic six-month extension
• Revenue Procedure 2022-32's five-year extended window for late portability elections
• The simplified valuation method for estates filing solely for portability
• How portability interacts with the Montana community property provisions under MCA 72-9-101
• The specific language required on a late portability election filing

The guide also integrates portability into the full filing sequence — so the executor knows when Form 706 fits relative to the final Form 2, the FID-3, the creditor notice publication, and the asset distribution timeline.

Who This Information Is For

• Surviving spouses whose estate administrator has not mentioned Form 706 or portability
• Executors of Montana estates where the decedent was married and the estate did not trigger a Form 706 filing requirement — the portability election may still apply
• Personal representatives who are within the five-year late filing window and want to determine whether Rev. Proc. 2022-32 still applies
• Adult children managing a parent's estate who want to protect their surviving parent's future estate tax position

Who Should Get Professional Help for Portability

• Surviving spouses whose estate includes significant business assets, multiple parcels of real estate in several states, or complex financial instruments requiring professional valuation
• Executors who are uncertain whether the five-year window has passed and need a definitive professional opinion before filing a potentially invalid late return
• Families navigating the community property rules under MCA 72-9-101 who need a CPA to run the double step-up calculations alongside the portability analysis

Frequently Asked Questions

Does Montana have a state portability election?

No. Montana has no state estate tax, so there is no state-level portability election. The portability election is federal only, made on IRS Form 706. Montana does not require any state filing for portability purposes.

Can a Montana surviving spouse still elect portability if the nine-month deadline passed?

Yes, if less than five years have passed since the date of death. Revenue Procedure 2022-32 allows a late portability election for estates that were not otherwise required to file Form 706. The return must include a specific citation to Rev. Proc. 2022-32 at the top of Form 706.

What is the DSUE amount?

The Deceased Spouse's Unused Exclusion (DSUE) amount is the portion of the deceased spouse's federal estate tax exemption that was not consumed by taxable transfers during the decedent's lifetime. For most Montana estates, this equals the full $13.99 million (2025) or $15 million (2026) per-person exemption.

Is portability worth filing for if the current estate is small?

Often yes. The portability election is free to make (Form 706 has no filing fee) and preserves an option that may become valuable as the surviving spouse's estate grows. Given the potential for real estate appreciation, retirement account accumulation, and life insurance proceeds, an estate that appears small today can exceed the exemption threshold over a surviving spouse's remaining lifetime — particularly if the exemption sunsets to lower levels.

Does a Montana estate need a tax clearance letter from the state before transferring assets?

No, for deaths occurring after December 31, 2004. Montana's estate tax was repealed for those deaths, and no state clearance certificate is required before transferring Montana property. The historical clearance requirement (Form INH-4) only applied to deaths between January 1, 2001, and December 31, 2004.

What if the surviving spouse remarries — does portability still apply?

The DSUE from the first spouse can be used by the surviving spouse until they remarry. Upon remarriage, the surviving spouse's available DSUE is recalculated based on the most recently deceased spouse. Planning for the surviving spouse's remarriage scenario involves analysis beyond the scope of a basic portability election.

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