Filing Form 706: Estate Tax Return Rules, Deadlines, and DSUE

(UNITED STATES) The federal estate tax is back in focus for families settling estates in 2025, as tax professionals report a steady rise in filings driven by high asset values, real estate gains, and a wave of late portability elections by surviving spouses. At the center of this shift is the estate tax return, Form 706, which must be filed within nine months of death for many estates and, in some cases, even when no tax is due.

Executors and surviving spouses are paying close attention to the DSUE amount—the deceased spousal unused exclusion—which can be transferred to a surviving spouse if a timely return is filed, preserving millions in future estate and gift tax shelter. According to analysis by VisaVerge.com, many families who thought they “didn’t owe estate tax” are now filing to lock in DSUE and avoid large bills later, especially as tax laws could change in coming years.

Who must file Form 706 and why portability matters

Under current rules, an estate tax return is required for decedents who were U.S. citizens or residents at death if the gross estate plus certain gifts made during life (post-1976 adjusted taxable gifts) exceeds the federal exemption for the year of death. For 2025, that federal exemption is reported at $13.99 million.

• Estates below that level usually don’t have to file, unless the surviving spouse wants to elect portability of the DSUE amount.
• Filing a protective Form 706 when no tax is due can allow the surviving spouse to combine their own lifetime exemption with the decedent’s unused exemption—potentially worth millions in future tax shelter.

The portability election can be decisive. Even modest estates may be worth filing for if the surviving spouse will later:
– build wealth,
– inherit additional assets, or
– sell appreciated property.

The IRS has relaxed some rules for late elections: for certain smaller estates not otherwise required to file, the time to make a late portability election can be extended to as much as five years from death, subject to IRS procedures.

Families should not assume “no tax due” means “no action needed.” Filing solely to elect DSUE can be one of the most valuable estate decisions a spouse can make.

Deadlines, extensions, and payment options

Time matters. The executor has nine months from the date of death to file Form 706.

• The IRS allows an automatic six-month filing extension if the executor files Form 4768 by the original due date.
• Extensions to file are common when estates need time to gather appraisals, bank records, gift histories, retirement statements, and life insurance details.

Important distinctions:
– An extension to file is not the same as an extension to pay. Interest can accumulate if tax is due but not paid.
– The IRS may grant extensions of up to 10 years to pay when there is reasonable cause—useful for estates with illiquid assets like family businesses or real property.

Estate income tax: Form 1041 basics

Executors also must track estate income taxes. If the estate earns income after death—interest, dividends, rental income, or capital gains—it may need to file Form 1041 (U.S. Income Tax Return for Estates and Trusts).

• Filing threshold: an estate generally must file Form 1041 if it has $600 or more in gross income for the tax year, or if any beneficiary is a nonresident alien.
• When an estate chooses a calendar year, the due date is generally April 15.
• An extension to file Form 1041—typically five and a half months—is available by submitting Form 7004 before the due date, but this does not extend time to pay tax.

Many estates discover this rule when a home or brokerage account sale is delayed, generating reportable income while probate continues.

Practical steps: the first 100 days after death

Here’s a practical checklist professionals advise executors to follow in the early months:

1. Order multiple death certificates and locate the will and any trust documents.
2. Identify and secure all estate assets, including real estate, accounts, and business interests.
3. Request date-of-death statements for financial accounts and insurance policies.
4. Hire qualified appraisers for real estate and closely held business interests.
5. Gather gift tax records for any post-1976 gifts made by the decedent.
6. Decide whether the estate will file for portability to lock in the DSUE amount.
7. Calendar the nine-month deadline and prepare Form 4768 if more time to file is needed.
8. Review estate income activity to determine if Form 1041 is required this year.

Reporting requirements and documentation

Form 706 requires a full account of estate assets, including:

• homes,
• bank accounts,
• retirement funds,
• business interests,
• life insurance, and
• any reportable gifts made during life.

Key points:
– Appraisals matter. Accurate valuations for real estate and business interests are essential.
– Beneficiary designations and copies of trust agreements are critical.
– Executors must also monitor generation-skipping transfer (GST) tax features included on Form 706 that could affect grandchildren and later heirs.

Special considerations for mixed-status and immigrant families

Immigrants and mixed-status families face added complexity:

• Cross-border assets and heirs may require additional documentation, translations, or apostilles.
• Locating records and confirming date-of-death values abroad can take longer, often making the six-month extension necessary.
• Non-U.S. property may need local valuations to support Form 706.
• A single nonresident alien beneficiary can trigger a Form 1041 filing requirement even if income is under $600.

Executors should also track U.S. withholding rules and any relevant tax treaties when distributing to nonresident beneficiaries.

Common traps and less-obvious duties

• Joint accounts and jointly owned property can create questions about ownership history.
• Retirement accounts often pass by beneficiary designation outside probate but may still need valuation and disclosure.
• Life insurance must be included if the decedent owned the policy or had certain powers, even if proceeds go directly to named beneficiaries.
• Adjusted taxable gifts include post-1976 gifts, so older transfers (e.g., business shares, down-payment assistance) may need reporting.

Incomplete gift histories can delay IRS review or reduce the DSUE recorded for the surviving spouse. Early requests to financial institutions to recreate histories can save weeks.

Communication and family dynamics

Filing Form 706 is not just administrative—it communicates how the estate treats assets, how cash will be raised to pay tax, and how the executor balances fairness with legal duties.

• Assign clear roles: one person collects documents, another coordinates appraisals and deadlines.
• Share a simple timeline with heirs (30/60/90 days) to reduce stress and avoid rushed decisions.
• If an estate requests extended time to pay (up to ten years in some cases), that relief can protect family businesses and prevent fire-sales.

Why many advisers recommend filing for portability now

Because federal policy could change after 2025, locking in DSUE now may be wise.

• The exemption is $13.99 million for 2025, but without new legislation it could revert after 2025 to roughly half that amount (adjusted for inflation).
• DSUE elected under current higher limits can still help a surviving spouse later, even if the exemption drops.
• A timely Form 706 can preserve tax shelter that might not be available in the same amount in future years.

Important IRS resources and forms

Executors can review official guidance and obtain forms from the IRS:

• Estate Tax overview: Estate Tax overview
• Form 706 (United States Estate and Generation-Skipping Transfer Tax Return): https://www.irs.gov/forms-pubs/about-form-706
• Form 4768 (Application for Extension of Time To File a Return and/or Pay U.S. Estate and Generation-Skipping Transfer Taxes): https://www.irs.gov/forms-pubs/about-form-4768
• Form 1041 (U.S. Income Tax Return for Estates and Trusts): https://www.irs.gov/forms-pubs/about-form-1041
• Form 7004 (Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns): https://www.irs.gov/forms-pubs/about-form-7004

Final takeaways and recommended actions

• Compute the gross estate and adjusted taxable gifts early and compare to the $13.99 million exemption for 2025.
• Even if a return isn’t required for tax due, consider filing Form 706 to elect portability and secure the DSUE amount for a surviving spouse.
• Use Form 4768 to get an automatic six-month extension to file if needed; use Form 7004 to extend Form 1041 filings by five and a half months, remembering neither extends time to pay.
• Keep meticulous records: appraisals, beneficiary designations, trust documents, and gift histories (post-1976).
• Communicate timelines and roles to heirs to reduce stress and avoid costly mistakes.

Early action, accurate records, and timely elections—especially for portability—give families clarity and flexibility. For immigrant households or estates with cross-border ties, plan for longer timelines and extra documentation. With deadlines on the calendar and DSUE in view, an accurate estate tax return can both honor a loved one’s legacy and protect a surviving spouse’s financial future.