Under 26 U.S.C. §2010(c), the DSUE amount allows a surviving spouse to use the unused federal estate tax exemption of the first spouse to die, but only if a timely estate tax return is filed electing portability. DSUE can be lost if no election is made or if the surviving spouse later remarries and their new spouse dies first. Because DSUE can disappear and does not protect future appreciation, many couples still use bypass trusts to preserve control and ensure full use of the first spouse’s exemption.
