Define: Marital Deduction

The marital deduction is a provision in the U.S. tax code that allows a spouse to transfer an unlimited amount of assets to their spouse, either during their lifetime or after death, without incurring any federal estate or gift taxes.

When a spouse transfers assets to their spouse, the value of the assets is deducted from their taxable estate. This deduction reduces the overall estate tax liability, potentially saving a significant amount of money in taxes.

Yes, there are certain limitations to the marital deduction. The deduction is only available for transfers between spouses who are U.S. citizens. Additionally, the deduction does not apply to transfers to non-citizen spouses unless certain requirements are met.

Yes, the marital deduction can be used for lifetime gifts as well as transfers made after death. However, it is important to keep in mind that there may be other gift tax implications for large lifetime gifts.

Yes, following the legalization of same-sex marriage in the United States, the marital deduction is available to same-sex couples who are legally married.

No, the marital deduction cannot be used for transfers to a former spouse. It only applies to transfers between current spouses.

Yes, the marital deduction can be used for transfers to a trust, as long as the trust meets certain requirements. For example, the trust must be a qualified terminable interest property (QTIP) trust.

The marital deduction only applies to federal estate taxes. State estate tax laws vary, and some states may not offer a similar deduction. It is important to consult with a local attorney to understand the specific estate tax laws in your state.

The marital deduction can be used for transfers of most types of assets, including cash, real estate, investments, and business interests. However, certain assets, such as life insurance policies, may have specific rules and limitations.

No, the marital deduction is specifically designed for transfers between spouses. If you wish to transfer assets to a non-spouse beneficiary, other estate planning strategies may be more appropriate, such as creating a trust or making lifetime gifts.