Does a Surviving Spouse Need to File an Estate Tax Return in Texas?

Margaret Flores turned 71 in January 2026, and by February she was a widow. Her husband David had died from a sudden cardiac event — no warning, no goodbye, just a phone call from the Southlake hospital. Their estate, accumulated over forty years of working and saving, was worth roughly nine million dollars: the Southlake home, a brokerage account, retirement accounts, and David's minority share in a small industrial supply company his family had built over three decades.

Their longtime CPA ran the numbers and delivered a clean verdict. The federal estate tax threshold for 2026 was fifteen million dollars per person. David's estate was well under that. Under the unlimited marital deduction, everything he left to Margaret passed to her completely free of estate tax. "No filing obligation," the CPA told her. "No return, no estate tax, no problem."

Margaret took that as permission to grieve without one more form to file.

Three years later, the industrial supply company was sold to a private equity buyer. David's share — which his estate had passed to Margaret — was worth $8.4 million at closing. Her estate was now $16.2 million. Still manageable, her CPA reassured her. Still likely under whatever the threshold would be by then.

But Margaret had missed something the CPA had not thought to mention. When David died, he had used none of his fifteen million dollar exclusion. Federal law allowed that unused exclusion — the Deceased Spousal Unused Exclusion, called the DSUE — to transfer to Margaret. She could have carried it alongside her own exclusion, stacking thirty million dollars of combined protection on a sixteen million dollar estate. Every dollar would have passed to her children tax-free.

To claim David's DSUE, his estate would have needed to file a federal estate tax return — Form 706 — within a specific window after his death. No one filed it. The unused exclusion was simply gone.

Margaret's estate will now face approximately $480,000 in federal estate tax. Her children will receive less than they would have if someone had filed a form three years earlier.

The Unlimited Marital Deduction — and Why It Creates Confusion

The confusion about estate tax returns starts with the unlimited marital deduction. Under 26 U.S.C. § 2056(a), a U.S. citizen can leave any amount of property to a surviving spouse who is also a U.S. citizen without triggering federal estate tax. The deduction is unlimited. There is no cap. Whatever passes to the surviving spouse is deducted from the taxable estate, which means the estate tax is deferred — not eliminated — until the surviving spouse dies.

On top of the marital deduction sits the basic exclusion amount. Under 26 U.S.C. § 2010(c)(3), as amended by the One Big Beautiful Budget Act (OBBBA § 70106), every person's estate has a fifteen million dollar exclusion for calendar year 2026. For a Texas couple where one spouse has a nine million dollar estate and leaves everything to the surviving spouse, the math is straightforward: the marital deduction eliminates the entire estate from taxation, and no return is technically required.

That last sentence is where the problem lives. A return may not be required. But required and advisable are different things entirely.

The Portability Election: Filing When Nothing Is Owed

In 2010, Congress added a feature to the federal estate tax that most families — and many accountants who rarely practice estate law — still do not fully understand. It is called portability, and it is governed by 26 U.S.C. § 2010(c)(4) and (c)(5).

Here is the mechanics: when a married person dies without using any of their fifteen million dollar exclusion, that unused amount — the DSUE — can be transferred to the surviving spouse. The surviving spouse carries it to their own death, adding it on top of their own exclusion. A couple where neither spouse has made taxable gifts during life effectively has thirty million dollars of combined federal estate tax protection, even if only one of them is still alive.

The catch is § 2010(c)(5)(A): to capture the DSUE, the executor of the deceased spouse's estate must make a portability election on a timely filed estate tax return. This requirement does not disappear just because no tax is owed. The election is made on Form 706 regardless of whether a single dollar of estate tax is due. A family that skips the return on the reasonable assumption that "there's nothing to file" forfeits the election permanently — unless they act quickly enough to qualify for an exception.

How Much Time Do You Have?

The regular deadline for Form 706 is nine months from the date of the decedent's death, with a six-month extension available by filing Form 4768. That gives a family fifteen months total under the standard rules. Miss that window without a late-filing strategy, and the DSUE is forfeited.

But Congress recognized that many families of modest estates — the ones least likely to have an estate attorney in the room when someone dies — were losing the portability election through simple ignorance. In 2022, the IRS published Rev. Proc. 2022-32, which created a simplified late-election procedure. Under that guidance, if a decedent's gross estate plus adjusted taxable gifts did not require a return to be filed — meaning the estate fell below the filing threshold — the executor can still file Form 706 to elect portability at any time before the fifth anniversary of the decedent's death.

This five-year window is significant. For a Texas family where one spouse died in 2026 with a nine million dollar estate, the executor has until 2031 to file Form 706 and capture the DSUE — as long as the estate was below the filing threshold at death. The CPA who tells a family "no filing needed" is not technically wrong about the requirement. But failing to mention the five-year opportunity is an omission that carries a real cost.

Why the DSUE Matters Even When Estates Seem Small

The question families most often ask is: "Our estate is nowhere near fifteen million dollars. Why would this ever matter to us?" The answer has two parts, and both are about things that change over time.

Estates grow. The couple with a two million dollar estate today may have a significantly larger one in twenty years. Real estate values in DFW have compounded aggressively. Business interests appreciate. Inheritance arrives unexpectedly. The surviving spouse who receives everything and lives another two decades might find their estate has grown past the threshold by the time they die. The DSUE from the first spouse, which cost nothing to claim, can shelter that entire excess.

The exclusion amount may change. The fifteen million dollar figure is statutory under 26 U.S.C. § 2010(c)(3) for calendar year 2026 and does not inflation-adjust until 2027. Future Congresses can and do change the rules. What is more than adequate protection today may be less so in fifteen years. Stacking DSUE on top of a surviving spouse's own exclusion builds in a margin for uncertainty that no one can currently calculate.

A surviving spouse who elects portability is not betting on a specific tax outcome. They are preserving an option that costs relatively little to create and potentially a great deal to forfeit.

The Texas Advantage: No State Estate Tax, and Community Property Helps

Texas families have two meaningful advantages in this analysis.

First, Texas has no state estate tax. Unlike some states — Massachusetts, Oregon, Maryland — Texas imposes no estate or inheritance tax at the state level. The entire conversation is about federal taxes only. For most Texans, the fifteen million dollar federal exclusion per person means no estate tax at all, regardless of whether portability is elected. The DSUE matters at the margins, for the families whose combined wealth approaches or exceeds thirty million dollars.

Second, Texas is a community property state. Under Texas Family Code § 3.002, property acquired during a marriage is presumed to be community property, owned equally by both spouses. When a spouse dies, only their half of the community estate passes through their estate — the surviving spouse already legally owned the other half. For a couple with a nine million dollar community estate, the decedent's taxable estate is roughly four and a half million dollars. That means a larger portion of the decedent's fifteen million dollar exclusion goes unused, and a correspondingly larger DSUE is available to elect.

Community property also reduces the chances that the estate exceeds the filing threshold, which in turn expands access to the five-year late-election window under Rev. Proc. 2022-32. For many Texas families, community property law and the late-election procedure together create a genuinely forgiving window for families who miss the initial filing deadline without realizing portability existed.

When an Estate Tax Return Is Definitely Required

Portability strategy aside, there are circumstances where Form 706 must be filed regardless of a family's preferences:

• The decedent's gross estate, plus adjusted taxable gifts made during life, exceeds fifteen million dollars for 2026.
• The estate includes generation-skipping transfers that require reporting.
• The executor wishes to make an allocation of the generation-skipping transfer tax exemption.

For most Texas families, the mandatory filing threshold is the primary test. If the estate is under fifteen million dollars and no taxable gifts were made during life, no return is required — but the portability election is still available and should be actively considered.

A Note on the Non-Citizen Surviving Spouse

The unlimited marital deduction under § 2056(a) applies only when the surviving spouse is a U.S. citizen. If the surviving spouse is a non-citizen — including lawful permanent residents — the marital deduction is unavailable without additional planning. The typical solution is a Qualifying Domestic Trust (QDOT) under 26 U.S.C. § 2056A, which defers the estate tax during the surviving spouse's lifetime while preserving U.S. taxing jurisdiction over the assets. This is a distinct and more complex analysis — and one that is particularly relevant in the DFW region, which has substantial international and immigrant communities. Portability does not apply to QDOT situations in the same way. If a non-citizen surviving spouse is involved, the analysis requires a tax-focused estate attorney immediately.

What Margaret Should Have Done — and What You Can Still Do

Margaret's story is not closed. If David's estate fell below the fifteen million dollar threshold at death — and with a nine million dollar estate in 2026, it did — she and her executor still had until February 2031 to file Form 706 under Rev. Proc. 2022-32 and elect portability. The five-year window is specifically designed for families in her position. Whether she is still within that window depends on when David died and whether the estate's gross value at death triggered a mandatory filing. An estate attorney can determine quickly whether the option is still open.

For families where the first spouse died more recently, the window is wider and the calculus is clearer: file Form 706, elect portability, and preserve an option that costs a few thousand dollars in professional fees and could save multiples of that in estate tax.

The most expensive question in estate planning is often the one no one thinks to ask. The accountant who handles the income tax returns and says "no estate tax return needed" is usually right about the immediate obligation. They may not have thought about portability — because portability is an estate planning tool, not an income tax concept, and the two disciplines do not always overlap in the same professional's practice.

Carla Alston has practiced tax and estate law for thirty-nine years. After earning her LL.M. in Taxation from NYU School of Law, she spent years as an in-house tax attorney before opening her own practice. She understands both the federal estate tax mechanics and the Texas community property overlay — and as a widow who navigated estate administration herself after her husband Tom died, she brings a direct understanding of what families face in the months after a death, when filing a tax return feels like the last thing anyone should have to think about.

If you are a surviving spouse in Texas who was told no estate tax return was needed — or if you are the executor of a Texas estate where the decedent's spouse is still living — the question worth asking is not whether a return was required. The question is whether the DSUE was elected. The answer to the second question may be worth significantly more than the answer to the first.

Request a Consultation

Call 214-250-4407 or request a consultation online to speak with an estate planning attorney about whether a portability election makes sense for your family. WG Law serves McKinney, Southlake, Frisco, Plano, Allen, and the greater DFW area from offices in McKinney and Southlake.

For related reading, see our guides on what estate planning costs in Texas, WG Law's estate planning practice, tax-smart estate planning in Texas, and whether a joint bank account overrides your Texas will.

This article is general legal and tax information, not legal advice or tax advice for your specific situation. Estate tax law is complex and fact-specific. Consult a licensed Texas estate planning attorney and a qualified tax professional before making any decisions about estate tax returns or portability elections.