Probate & Trust Law Section Conference Manual ... - Minnesota CLE

So portability is achieved by giving surviving spouses a “deceased spousal unused
exclusion amount” (and its ugly acronym, “DSUE Amount”) 20 on top of the $5 million basic
exclusion amount, and this DSUE Amount generally consists of the unused portion of the first
deceased spouse’s basic exclusion amount.
The Joint Committee on Taxation offers a helpful example of how the DSUE Amount
works:
Example 1.−Assume that Husband 1 dies in 2011, having made taxable transfers
of $3 million and having no taxable estate. An election is made on Husband 1's
estate tax return to permit Wife to use Husband 1's deceased spousal unused
exclusion amount. As of Husband 1's death, Wife has made no taxable gifts.
Thereafter, Wife's applicable exclusion amount is $7 million (her $5 million basic
exclusion amount plus $2 million deceased spousal unused exclusion amount
from Husband 1), which she may use for lifetime gifts or for transfers at death. 21
2. First Spouse Must Die in 2011 or Later
Notice that the DSUE Amount is available “with respect to a surviving spouse of a
deceased spouse dying after December 31, 2010.” Notice that the first deceased spouse has to
die in 2011 or later; a surviving spouse of a decedent who died in 2010, for example, cannot
claim a DSUE Amount from the deceased spouse. 22
3. The “Last Deceased Spouse”
Section 2010(b)(4)(B) makes reference to the unused exclusion of the surviving spouse’s
“last such deceased spouse” (i.e., the last spouse of the surviving spouse to have died in 2011
or later but before the surviving spouse). Obviously this language is intended to preclude
20 A better term would have been “initial decedent’s unused exclusion,” if only because I‐DUE would be a more apt
acronym for a provision involving spouses.
21 Joint Committee Report,supra note 5, at 52.
22 One could argue that the “dying after 2010” language applies to the “surviving spouse” and not to the “deceased
spouse.” Under this interpretation, the portability election would be available provided only that the surviving
spouse died in 2011 or later. Thus, for example, if a 2011 decedent was the surviving spouse of a decedent who
died in 2008 having used only $1.5 million of the $2 million applicable exclusion amount then in effect, this
interpretation would suggest that the surviving spouse’s estate could claim a DSUE Amount of $500,000. This is
clearly not the correct interpretation, however. First, as explained infra, the portability election is made on the
timely filed estate tax return of the first spouse to die. No one who died in 2009 or earlier would have made an
election, and any return now filed for one who died in 2009 or earlier would not be timely. Second, the Joint
Committee’s Technical Explanation states that the DSUE Amount is “any applicable exclusion amount that remains
unused as of the death of a spouse who dies after December 31, 2010.” This supports the interpretation that the
first deceased spouse must die in 2011 or later in order for portability to be on the table, not just the surviving
spouse.
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