Question

What are the requirements for a marital deduction?

Answer 1

The marital deduction is a provision in the United States Federal Estate and Gift Tax Law that allows a person to transfer unrestricted tax free amount of funds or assets to his/her spouse at any point of time including at the time of death of the transferor.

To ensure that the property actually transfers to spouse, marital deduction has 6 requirements which are as follows:

1. There is a surviving spouse
2. The surviving spouse and the decedent must be legally married under state law and federal law.
3. The property for which the marital deduction has been claimed can be included in the the surviving spouse's gross estate unless the property has been consumed or disposed of before the surviving spouse's death.
4. The property must pass to a surviving spouse who is a U.S citizen or to a qualified domestic trust that provides support to the surviving spouse.
5. The property interest must pass from the decedent to the surviving spouse by trust, inheritance, elected share, exercise, release of power of appointment held by the decedent, as the beneficiary of a life insurance policy on the decedent or by any other transfer.
6. The property interest cannot be a nondeductible terminal interest. If so, then the interest can be transferred to someone other than the surviving spouse.