ACTEC Trust & Estate Talk Loss of the Portability Election: Estate of Rowland v. Commissioner
Dec 16, 2025
Dive into the dilemma of portability in estate planning, highlighted by the costly case of Rowland v. Commissioner. Discover how an incomplete estate tax return resulted in a $3.7 million loss for the surviving spouse. Understand the nuances of relaxed reporting rules and why they failed in this scenario. The discussion covers critical steps to ensure a valid portability election and the IRS's stance on prevalidation. Gain insights that could save estates from significant financial pitfalls!
AI Snips
Chapters
Transcript
Episode notes
What Portability Actually Does
- Portability lets a surviving spouse use the deceased spouse's unused estate tax exemption for future gifts or estate tax liability.
- The transferred amount is called the deceased spousal unused exclusion amount (DSUE) and stacks with the surviving spouse's own exemption.
Rowland Case Facts And Timing
- Faye Rowland died in 2016 and her estate reported an estimated $3 million gross value, below that year's exemption.
- Her executor filed a late, minimal return claiming relaxed reporting and later Billy's estate tried to use the DSUE after Billy died.
Magnitude Of The Lost DSUE
- Billy Rowland died after the Tax Cuts and Jobs Act increased the exemption to $11.18 million, and he needed Faye's DSUE.
- Because Faye's portability election failed, Billy's estate lost about $3.7 million of DSUE.