What is the DSUE and how can a surviving spouse use it?

When it comes to estate planning, one of the most powerful but often overlooked tools is the deceased spousal unused exclusion (DSUE). Whether you are a tax professional guiding clients or an individual planning for your family’s future, understanding DSUE and the portability election can make a world of difference in preserving wealth for the next generation.

What is the DSUE?

The DSUE is the portion of the federal estate and gift tax exclusion that a deceased spouse did not use during their lifetime or at death. Thanks to the concept of “portability” a surviving spouse can add this unused exclusion to their own, potentially doubling the amount that can pass free of federal estate and gift tax. The key detail is that the estate executor must file Form 706, United States Estate and Generation Skipping Transfer Tax return, to elect portability, even if the estate owed no tax. Without that filing, the DSUE is lost forever.

For 2025, the basic exclusion amount is $13,990,000 per person. If a spouse passes away without using their full exclusion, the surviving spouse can elect to “port” the unused amount, known as the DSUE, and combine it with their own exclusion. This can shield millions more from estate and gift tax liability.

How the DSUE can be used

Once properly elected, the DSUE can be used by the surviving spouse in two ways.

• It can be applied to lifetime gifts to shelter those transfers from gift tax
• It can be used at time of death to reduce or eliminate estate tax

This portability feature allows a surviving spouse to combine their own basic exclusion with their spouse’s unused amount, potentially doubling the exemption available.

For example, if the survivor’s own exclusion is $13,990,000 million and they inherit a $5 million DSUE, they now have $18,990,000 million of total exclusion to work with. This is a significant planning advantage, especially when dealing with appreciated assets or growing estates. Note that the DSUE only comes from the last deceased spouse, which means timing and remarriage are essential considerations in estate planning.

Why the DSUE matters

The DSUE is crucial because it prevents valuable exemptions from being wasted. Before portability, couples often had to rely on complex trust arrangements, such as bypass or credit shelter trusts, to preserve both spouses’ exemptions. With portability, the process is much simpler. File Form 706 and the survivor can carry forward the unused amount.

This strategy is especially critical as we approach 2026, when the current historically high exclusion amounts are scheduled to drop by roughly half. Preserving a deceased spouse’s unused exclusion now could save millions in estate tax for the survivor later.

Consider a case where one spouse leaves everything to their surviving spouse, using the marital deduction. The marital deduction keeps the surviving spouse from paying any estate tax because all assets transfer directly to the remaining spouse, without using a Form 706. However, the deceased spouse’s exemption goes unused unless the executor files Form 706 to elect portability. If the form is timely filed, the surviving spouse can use DSUE in the future.

How tax pros can help

This is where tax professionals can bring tremendous value. Many clients assume that if an estate is below the filing threshold and owes no estate tax, there is no reason to file Form 706. You can explain why filing anyway is often one of the best estate planning decisions they can make.

You can educate clients about DSUE, help executors prepare and file the estate return correctly and on time, and ensure the portability election is clearly marked.

You can also guide families with more complicated circumstances, such as remarriage, where the “last deceased spouse” rule can affect how much DSUE is available. With the exemption scheduled to shrink in 2026, you can position DSUE as an essential planning tool for clients whose estates may grow beyond those lower limits.

In short, you’re not just helping with compliance, you’re giving your clients peace of mind and potentially saving them and their heirs millions. Filing Form 706 to elect portability can preserve millions in estate tax savings. Tax pros play a critical role in making sure this opportunity isn’t lost.

Have more questions?

The IRS has a published list of frequently asked questions to assist tax professionals and their clients navigate estate tax returns. IRS Publication 559, Survivors, Executors and Administrators, can also provide tax rate schedules and answer other questions you might have to help your client during a difficult time.