When an individual passes away, the executor of their estate is responsible for assessing the total fair market value of the decedent's assets. If this gross estate value exceeds the filing threshold for the year, the executor must file IRS Form 706 (United States Estate and Generation-Skipping Transfer Tax Return).
Portability and the Marital Deduction
Assets left to a surviving spouse are generally exempt from estate tax due to the unlimited marital deduction. However, executors should still file Form 706 to elect 'portability'—transferring the decedent's unused estate tax exemption to the surviving spouse to protect their future estate.
Filing Timelines and Appraisals
Form 706 is due nine months after the date of death. Since calculating values requires formal appraisals of real estate, business interests, and personal property, beginning the estate valuation process early is critical to prevent filing delays.