Draft of Form 706 Released

August 24, 2012 | Roger McEowen

The IRS has released a draft of Form 706 which for the first time addresses the portability of a deceased spouse's unused exclusion - the deceased spousal unused exclusion amount (DSUEA).  While Form 706 must be filed in the estate of the first spouse to die (in 2011 or 2012) to make the portability election so that the unused portion of the exclusion can be used in the surviving spouse's estate (if the surviving spouse also dies in 2011 or 2012), Part 6, Section A contains a box that the executor can check to opt out of the election.  This opt-out provision will be necessary when an estate tax return must be filed in the first spouse's estate, but where portability is not desired to be elected.  Without opting out, portability automatically applies if Form 706 is filed.  Other parts of the draft form of interest in Part 6 include a place to list assets transferred to a domestic trust, a place to calculate the DSUEA that is portable, as well as a place to calculate the DSUEA if there was more than one predeceased spouse (portability applies only to the decedent's last deceased spouse).  The draft Form 706 can be accessed here: f706--dft.pdf