Form 706 —
Federal Estate Tax Return
The federal estate tax return — required for larger estates, and carrying the portability election that protects surviving spouses regardless of estate size.
What is Form 706?
Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return, reports the value of a decedent's gross estate and calculates any federal estate tax owed. It is separate from the income tax return (Form 1040 or 1041) and deals specifically with the transfer of wealth at death.
The 2026 exemption
For decedents dying in 2026, the federal estate tax exemption is $15,000,000 per individual ($30 million for married couples). This exemption was permanently raised by the One Big Beautiful Bill Act and is now indexed for inflation — the scheduled sunset that would have dropped it to ~$7 million has been repealed. Estates below the threshold owe no federal estate tax.
Portability — why smaller estates still need to file
Even when an estate owes no estate tax, filing Form 706 may still be the right move — specifically to elect portability and preserve the Deceased Spousal Unused Exclusion (DSUE). If a spouse dies with an estate below $15 million, the unused exemption can be transferred to the surviving spouse, potentially shielding up to $30 million combined. But this election only happens if Form 706 is timely filed. Missing the deadline means losing the DSUE permanently.
Key elections and deductions
- Marital deduction — transfers to a surviving spouse are generally fully deductible
- Charitable deduction — bequests to qualifying charities reduce the taxable estate
- Alternate valuation date — assets may be valued six months after death if values declined
- Special use valuation — farm and closely-held business real estate may qualify for reduced valuation
- GSTT elections — generation-skipping transfer tax planning for trusts benefiting grandchildren
- Portability (DSUE) — must be elected on a timely filed 706
State estate taxes
Alabama does not have a separate state estate tax. However, if the decedent owned property in other states, those states' rules may apply — and many states have much lower exemption thresholds than the federal level. State portability is generally not available.
Timeline and extensions
Form 706 is due nine months after the date of death. A six-month extension is available, bringing the extended deadline to 15 months. Any tax owed is still due at the nine-month deadline — the extension covers the filing only. The portability election must be made by the filing deadline including extensions.
What we need to get started
- Date of death and full legal name of the decedent
- Will and trust documents
- Date-of-death values for all assets — bank accounts, brokerage accounts, real estate, retirement accounts, business interests, life insurance
- Formal appraisals for real estate and closely-held business interests
- Prior gift tax returns (Form 709) filed during lifetime
- Liabilities and deductible expenses of the estate
- Information on the surviving spouse (for portability evaluation)
Frequently Asked Questions
Does every estate need to file Form 706?
No. A federal estate tax return is only required when the gross estate exceeds the filing threshold — $15 million for 2026 decedents. However, estates below that amount should still consider filing to elect portability and preserve the deceased spouse's unused exemption for the survivor.
What is the deadline for filing Form 706?
Nine months after the date of death. A six-month extension is available by filing Form 4768, but any tax owed is still due at the nine-month mark — the extension covers the return, not the payment.
What happens if we miss the portability election deadline?
If the deadline passes without a timely filed 706, the DSUE is lost. The IRS has offered late-filing relief in some cases — generally for estates that weren't otherwise required to file — but relief isn't guaranteed and involves additional cost and paperwork.
Do we need formal appraisals for everything?
Financial accounts are valued using date-of-death statements. Real estate, closely-held business interests, and unusual assets typically require a qualified appraisal. We'll identify which assets need formal valuations early in the process.