A Widow Has Five Years to Claim Her Late Husband’s Unused $15 Million Exemption by Filing Form 706 Even When No Tax Is Due. Rev. Proc. 2022-32 Is the Extension Most Families Never Hear About, and After It the Exemption Is Gone

A husband dies in 2026 and leaves everything to his wife. Assume his estate totals $14 million, which falls below the federal filing threshold, so nobody files an estate tax return. No tax is due; the lawyer closes the file.

That skipped return could later cost her heirs $2.8 million. The fix is Form 706, and a little-known IRS relief rule, Rev. Proc. 2022-32, gives the family until the fifth anniversary of his death to file it. After that date, his unused $15 million exemption is gone for most families.

How a Spouse’s Unused Exemption Passes to the Widow

Every estate gets a basic exclusion amount, which is the value that passes free of federal estate tax. For deaths in 2026, that amount is $15,000,000, up from $13,990,000 in 2025. The code now fixes the figure at $15,000,000 and indexes it for inflation after 2026.

Property left to a surviving spouse generally passes tax-free through the marital deduction, which has no limit in most cases. That means our husband used none of his exemption. Under 26 U.S.C. § 2010(c)(4), the leftover amount, called the deceased spousal unused exclusion (DSUE), can transfer to the widow and stack on top of her own exemption.

However, Section 2010(c)(5)(A) lets the DSUE count only if the executor files an estate tax return on which such amount is computed and makes an election. Without the return, the exemption doesn’t transfer.

Worked Math Shows $2.8 Million Riding on One Form

Hypothetically, she owns $8 million herself, so after his death she holds $22 million. To keep the math clean, assume she dies with that same amount and the exemption is still at its 2026 level.

Above the exemption, every dollar gets taxed at the top rate of 40%. In practice, her own exemption will grow with inflation. His DSUE won’t, because it’s fixed when the election is made at his death.

Rev. Proc. 2022-32 Could Turn Nine Months Into Five Years

An estate tax return is normally due nine months after death, or later if the executor gets an extension. The statute says no election may be made on a late return.

The IRS offers a way around that. Rev. Proc. 2017-34 gave estates until the second anniversary of death. On July 8, 2022, the IRS released Rev. Proc. 2022-32, which stretched the window to five years but only certain estates. To qualify:

• The spouse died after December 31, 2010, was a U.S. citizen or resident, and was survived by a spouse.
• The estate had no filing requirement under Sec. 6018(a), meaning the gross estate fell below the basic exclusion amount.
• No timely Form 706 was filed.
• The executor files a complete, properly prepared Form 706 by the fifth anniversary of death.
• The top of the return states it was “Filed Pursuant to Rev. Proc. 2022-32” to elect portability.

Estates big enough to require a return fall outside this procedure and must file on time.

NOTE: It doesn’t extend the deadline for every estate, doesn’t apply to estate required to file under section 6018(a), and doesn’t extend the surviving spouse’s refund-claim deadline.

After Year Five, Most Families Lose the Exemption

Once the fifth anniversary passes, the only option left is a private letter ruling request. That means an IRS user fee, legal bills, and no guarantee of success. Relief windows can also close for good. In a September 2026 notice, the IRS listed an earlier portability fix, Rev. Proc. 2014-18, as obsolete because it expired on December 31, 2014.

Three more traps can catch families:

• Remarriage. The DSUE comes from the “last such deceased spouse”. If she remarries and outlives her second husband, his DSUE, which could be zero, replaces the first one.
• Audit exposure. The IRS can examine the first spouse’s return to check the DSUE even after the time has expired under section 6501. Weak valuations can resurface decades later.
• State estate taxes. These follow separate rules, and many states with an estate tax don’t let a survivor inherit a spouse’s unused state exemption.

Who Should File Form 706 Even With No Tax Due

Filing has real costs: appraisals, preparer fees, and a full Form 706. For a couple with a few million dollars and little growth ahead, the cost may outweigh the benefit.

For a couple whose combined assets could grow past one $15 million exemption, the return is cheap insurance. That’s especially true for families holding a business, real estate, or concentrated stock positions. It also protects against Congress cutting the exemption later, because the DSUE amount is set at the first death. (The portability election is one line item on a much longer estate checklist we put together in a free guide to passing money to family instead of to lawyers.)

1. Mark the fifth anniversary of the date of death on the calendar.
2. Collect date-of-death values for every asset, including brokerage statements and real estate appraisals.
3. Have an estate attorney or CPA prepare Form 706 with the Rev. Proc. 2022-32 statement at the top.

Because a single filing can be worth millions, run these numbers with a CPA or estate tax attorney well before the five-year deadline.

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