August 25, 2025

Avoiding Costly Estate Tax Mistakes: How Proper Planning Can Save Millions

When it comes to estate planning, even the smallest mistake can have enormous financial consequences for families. A recent Tax Court ruling highlights just how critical it is to properly handle estate tax portability—a valuable but often misunderstood tool that allows a surviving spouse to claim their deceased spouse’s unused federal estate tax exemption.

At our firm, we regularly work with families to create comprehensive estate plans that avoid these costly errors. This recent case serves as an important reminder of why professional guidance is essential.

The $1.5 Million Mistake: What Happened in the Rowland Case

In a recent case involving Billy and Fay Rowland, the surviving spouse lost the ability to use his late wife’s unused estate tax exemption—a misstep that ultimately cost their family $1.5 million in additional estate taxes.

Here’s what went wrong:

  • Fay passed away in 2016, when the federal estate tax exemption was $5.45 million.
  • Her estate, valued at around $3 million, filed an IRS Form 706 to elect portability.
  • However, the estate’s filing failed to properly itemize asset values and included heirs beyond just the surviving spouse.
  • Nearly five years later, the IRS audited the return and ruled it invalid.
  • The Tax Court upheld the IRS’s decision, meaning Billy lost access to his wife’s $3.7 million unused exemption—resulting in a significant estate tax liability for his heirs.

This case underscores a crucial point: even if an estate isn’t taxable, filing Form 706 accurately and on time is essential to preserve portability.

What Is Estate Tax Portability and Why It Matters

Estate tax portability allows a surviving spouse to “inherit” the unused portion of their spouse’s federal estate tax exemption. In 2025, the federal exemption is $13.99 million per person—meaning married couples can potentially shelter up to $27.98 million from federal estate taxes.

However, portability isn’t automatic. To secure it, the executor must:

  1. File IRS Form 706 within nine months of death (or up to 15 months if an extension is filed).
  2. Provide a detailed valuation of assets—not just a gross estimate.
  3. Avoid technical errors that could invalidate the election.

Failing to follow these steps can result in losing access to millions in tax-saving benefits, as the Rowland family learned the hard way.

Common Estate Planning Mistakes We See

At our firm, we frequently encounter these errors that can put families at risk:

  • Not filing Form 706 because the estate falls below the exemption threshold
  • Incomplete or inaccurate asset valuations that trigger IRS audits
  • Missing critical deadlines for filing or requesting extensions
  • DIY estate planning without professional oversight
  • Failure to coordinate between wills, trusts, and tax strategies

Each of these mistakes can lead to significant, and sometimes irreversible, financial consequences.

How Our Firm Can Help Protect Your Estate

Our experienced estate planning and probate attorneys help clients navigate these complex rules with precision. We:

  • Prepare and file Form 706 accurately and on time
  • Review and verify asset valuations to withstand IRS scrutiny
  • Develop strategic estate plans that maximize tax exemptions
  • Coordinate with financial advisors and CPAs for seamless planning
  • Provide litigation support if the IRS challenges your filing

Whether you’re planning ahead or administering a loved one’s estate, we ensure every detail is handled correctly—so your family doesn’t face unexpected tax burdens down the road.

Final Takeaway

The Rowland case is a powerful reminder: estate planning is about more than drafting documents—it’s about executing them flawlessly. A single missed step can cost your family millions.

If you’ve recently lost a loved one or are starting to plan your estate, our firm can help you:

  • Preserve your spouse’s unused estate tax exemption
  • Minimize future tax liabilities
  • Protect your family’s legacy

Contact our team today to schedule a consultation and ensure your estate plan is as strong and effective as possible.