Form 706 — United States Estate (and Generation-Skipping Transfer) Tax Return

Who Must File Form 706?

Form 706 must be filed for the estate of every U.S. citizen or resident whose gross estate, plus adjusted taxable gifts made after December 31, 1976, exceeds the applicable exclusion amount ($13.99 million in 2026, indexed for inflation). The gross estate includes all property owned by the decedent at death, including real estate, bank accounts, investments, retirement accounts, life insurance proceeds (if the decedent owned the policy), and business interests.

Even if the estate does not owe estate tax (because the gross estate is below the filing threshold), the executor may still need to file Form 706 to elect portability of the deceased spouse's unused exclusion amount (DSUE). Portability allows the surviving spouse to use the deceased spouse's unused exclusion amount for gift and estate tax purposes. The portability election must be made on a timely filed Form 706 (including extensions).

Portability Election: DSUE

The portability election allows the surviving spouse to use the deceased spouse's unused exclusion amount (DSUE) for gift and estate tax purposes. The DSUE is the amount of the deceased spouse's applicable exclusion amount that was not used at the time of death. The DSUE is added to the surviving spouse's own applicable exclusion amount, effectively doubling the amount of assets that can pass estate-tax free.

To elect portability, the executor must file a timely Form 706 (within 9 months of the date of death, plus a 6-month extension if requested). The IRS has provided a simplified method for estates that are not otherwise required to file Form 706 to make the portability election: Revenue Procedure 2022-32 allows estates to file a late portability election within 5 years of the date of death.

Marital Deduction and Charitable Deduction

The marital deduction under §2056 allows an unlimited deduction for property passing to a surviving U.S. citizen spouse. This means that married couples can defer estate tax until the death of the surviving spouse by leaving all assets to the surviving spouse. However, the marital deduction is not available for property passing to a non-citizen spouse; instead, a Qualified Domestic Trust (QDOT) must be used to defer estate tax on property passing to a non-citizen spouse.

The charitable deduction under §2055 allows an unlimited deduction for property passing to qualified charitable organizations. Practitioners should advise clients with charitable intent to consider leaving assets directly to charity at death (or through a charitable remainder trust or charitable lead trust) to reduce the taxable estate.

Generation-Skipping Transfer (GST) Tax

The generation-skipping transfer (GST) tax under §2601 imposes a 40% tax on transfers to 'skip persons' (grandchildren and more remote descendants, or non-family members more than 37.5 years younger than the transferor). The GST tax applies in addition to the estate tax or gift tax. Each individual has a GST exemption equal to the applicable exclusion amount ($13.99 million in 2026).

The GST tax applies to three types of transfers: (1) direct skips (transfers directly to a skip person, subject to both estate/gift tax and GST tax); (2) taxable terminations (termination of a non-skip person's interest in a trust, leaving only skip persons as beneficiaries); and (3) taxable distributions (distributions from a trust to a skip person). Practitioners should allocate the GST exemption carefully to maximize the amount of assets that can pass to grandchildren and more remote descendants free of GST tax.

Filing Deadlines and Extensions

Form 706 is due 9 months after the date of death. An automatic 6-month extension of time to file is available by filing Form 4768 (Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes) before the 9-month deadline. The extension of time to file does not extend the time to pay the estate tax; interest accrues on any unpaid tax from the original due date.

The estate tax may be paid in installments over up to 14 years if the estate includes a closely held business interest that represents more than 35% of the adjusted gross estate (§6166). The installment payment election must be made on a timely filed Form 706.

Frequently Asked Questions