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

surviving spouses from serially marrying poor people not long for this world and racking up
their DSUE Amounts. While the language is effective in precluding this practice, it has another
interesting ramification. For one who is the surviving spouse of multiple predeceased spouses,
the order of death matters. Another example from the Joint Committee on Taxation illustrates:
Example 2.−Assume the same facts as in Example 1, except that Wife
subsequently marries Husband 2. Husband 2 also predeceases Wife, having
made $4 million in taxable transfers and having no taxable estate. An election is
made on Husband 2's estate tax return to permit Wife to use Husband 2's
deceased spousal unused exclusion amount. Although the combined amount of
unused exclusion of Husband 1 and Husband 2 is $3 million ($2 million for
Husband 1 and $1 million for Husband 2), only Husband 2’s $1 million unused
exclusion is available for use by Wife, because the deceased spousal unused
exclusion amount is limited to the lesser of the basic exclusion amount ($5
million) or the unused exclusion of the last deceased spouse of the surviving
spouse (here, Husband 2’s $1 million unused exclusion). Thereafter, Wife's
applicable exclusion amount is $6 million (her $5 million basic exclusion amount
plus $1 million deceased spousal unused exclusion amount from Husband 2),
which she may use for lifetime gifts or for transfers at death. 23
In this example, had Husband 2 predeceased Husband 1, Wife’s applicable exclusion amount
would have been the same $7 million as in the Technical Explanation’s Example 1.
Some planners might think an easy way to solve the problem of the surviving spouse
who remarries a wealthier spouse who also predeceases is simply to avoid making a DSUE
Amount election on the wealthier deceased spouse’s estate tax return. But the statute refers
to the “last deceased spouse” and not the “last deceased spouse that made a DSUE Amount
election.” So if the executor of the last deceased spouse makes no election at all, the surviving
spouse’s DSUE Amount is zero, even if the intent in not making the election was to preserve the
DSUE Amount from an earlier predeceased spouse of the surviving spouse. 24
4. Making the Election.
The DSUE Amount is not available automatically; the statute requires an election from
the first deceased spouse’s executor. The 2010 Act explains in this addition to § 2010(c):
23 Joint Committee Report,supra note 5, at 52.
24 As the Joint Committee puts it, “The last deceased spouse limitation applies whether or not the last deceased
spouse has any unused exclusion or the last deceased spouse’s estate makes a timely election.” Id. at n. 57.
26