Skipping the Portability Election on a QTIP Trust Can Cost $5.2M in Extra Estate Tax

A trust that defers tax, not a trust that avoids it

We ran $8,000,000 funding a QTIP trust, with $2,000,000 of the first spouse’s exemption already used elsewhere, against $10,000,000 of the surviving spouse’s own assets, growing at 6% for 15 years, through the calculator: with portability elected, the survivor’s effective exemption reaches $28,000,000 (their own $15,000,000 plus $13,000,000 of the first spouse’s unused exemption), leaving $6,055,219 in estate tax owed at the second death. Without electing portability — a common, entirely avoidable executor oversight — the survivor’s exemption is just their own $15,000,000, and the tax bill jumps to $11,255,219. The election itself, filed on a single form, is worth $5,200,000 here.

How the math works

QTIP funding uses the unlimited marital deduction, not the first spouse’s exemption — so dsueAvailable = firstSpouseExemption − exemptionUsedElsewhere stays available regardless of QTIP size. effectiveSurvivorExemption = survivorOwnExemption + (portabilityElected ? dsueAvailable : 0). At the second death, the QTIP (grown) is added back into the survivor’s own gross estate under IRC §2044, and anything above the effective exemption is taxed at the marginal rate.

What this tool doesn’t model: state-level QTIP/portability conformity (many states don’t recognize portability at all, even when the federal election is made), the survivor’s own subsequent gifting during their remaining lifetime, or Rev. Proc. 2022-32’s simplified late-election relief for estates that missed the original deadline but qualify for an extension.

Math runs locally. Inputs never leave your browser. Source on github.

Where this doesn’t apply

• The combined estate will never approach either spouse’s exemption. Below the exemption, portability doesn’t change anything — there’s no tax to defer or reduce.
• The first spouse’s estate is in a state that doesn’t recognize portability. The federal DSUE can still apply to federal estate tax even if a state ignores it for its own state-level tax — check both layers separately.
• The executor missed the original portability deadline. Rev. Proc. 2022-32 offers simplified relief for a late election in many cases — this isn’t automatically a permanently lost opportunity, but requires prompt action.
• A different marital trust structure (like a straight bypass/credit shelter trust) is being used instead of a QTIP. Those structures use the exemption directly at the first death rather than relying on the marital deduction plus later portability.

What to actually do

1. Confirm the executor files Form 706 and affirmatively elects portability — this is required even for estates well under the filing threshold.
2. Check whether the relevant state recognizes portability for its own state estate tax, separately from the federal election.
3. If the deadline was missed, ask an estate attorney about simplified late-election relief under Rev. Proc. 2022-32 before assuming the DSUE is gone.
4. Model the second-death tax bill periodically as asset values and the exemption both change over time.
5. Compare a QTIP-plus-portability structure against a bypass trust with an estate attorney — the right choice depends on control goals, not just the tax math.