Deceased spousal unused exclusion (DSUE) | Adviser Investments

Tax-Proof Your Estate With the DSUE

Estate planning parlance is chock-full of acronyms.

We recently wrote about SLATs and CRTs, and there’s another we’d like to share: A deceased spousal unused exclusion (DSUE).

According to our manager of financial planning, Andrew Busa, the DSUE is one of the most important financial planning tools, but most people have never heard of it. Why is the DSUE so notable? It maximizes estate benefits for high-net-worth married couples.

The current federal gift and estate tax exemption for individuals is $12.9 million—and it’s twice that for married couples. With a deceased spousal unused exclusion, the estate of a surviving spouse can benefit from the unused portion of the decedent’s exemption, thereby shielding additional assets from estate tax. Also known as a “portability election,” this combined exemption maximizes benefits for families that would otherwise contend with a top estate tax rate of 40%.

And keep in mind that the federal gift and estate tax exemption for individuals is scheduled to revert to $5 million (subject to inflation indexing) in 2026—meaning many more families may benefit from portability.

If there is a reasonable chance that your estate may exceed the federal estate tax exemption, let’s talk in our next meeting about the logistics of filing the tax paperwork to make a portability election in the future. It’s an admittedly complicated and often costly process, but it could also be one of the more consequential financial planning moves you can make if your estate qualifies.

Call us if you have any questions about DSUEs or your overall estate plan.

If you are a client, please reach out and we’d be more than happy to help.

If you are not a client, click here to book a meeting with one of our expert financial advisors now!

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