Since portability became permanent law, many wealthy couples assume they no longer need a credit shelter (“B”) trust. Even with the federal exemption now at $15 million per person, there are good reasons to keep one in the plan.
Key takeaways
- Portability lets a surviving spouse use the deceased spouse’s unused exemption (DSUE), but only if an estate tax return is filed at the first death.
- The DSUE amount is frozen at the first death and isn’t indexed for inflation or growth; a B trust shelters all future appreciation.
- B trusts also add protection from creditors and changed plans, and can own life insurance outside the taxable estate.
Portability freezes the unused exemption at the first death. A B trust shelters everything the assets grow into afterward.
Why B trusts were created
Before portability, the first spouse’s exemption was lost if everything passed to the survivor under the unlimited marital deduction. Couples used a credit shelter or “B” trust, funded with assets equal to the exemption, to preserve it. The American Taxpayer Relief Act of 2012 made portability permanent: the deceased spouse’s unused exemption (DSUE) can pass to the survivor. With the exemption now $15 million per person from 2026, see what the permanent exemption means for planning.
5 reasons to keep B trust planning
- Protects appreciation: assets in a B trust grow outside both spouses’ estates. The DSUE is locked in at the first death and doesn’t grow.
- Protects the plan: a B trust locks in the first spouse’s wishes, so they can’t be changed by a later will or challenged in probate.
- Creditor protection: assets in the trust aren’t subject to claims against the surviving spouse.
- Avoids losing the exemption by mistake: portability requires a timely estate tax return at the first death, even when no tax is due. A B trust doesn’t depend on that filing.
- Leverages life insurance: a B trust can own life insurance intended to pay future estate taxes, keeping the death benefit outside the taxable estate.
The trade-offs
Assets in a B trust don’t receive a second step-up in income tax basis at the surviving spouse’s death, which can matter for highly appreciated assets. Portability is also simpler and cheaper to administer. The right answer depends on the size of the estate, expected growth, family dynamics, and state estate taxes, which is why this belongs in a conversation with the client’s attorney and tax advisor.
Frequently asked questions
What is portability in estate planning?
The ability of a surviving spouse to use the deceased spouse’s unused federal estate tax exemption, provided an estate tax return is filed at the first death.
Is a credit shelter trust still needed with portability?
Often it still adds value: it shelters future growth, protects against creditors and changed plans, and can own life insurance outside the estate.
Does the unused exemption grow with inflation?
No. The deceased spouse’s unused exemption is fixed at the first death, while assets in a B trust can grow outside the estate.
Reviewed by Tim Fuller on 2026-09-25
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
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