What is Marital Deduction?

The marital deduction refers to the deduction the IRS allows for a taxpayer to transfer some or all of his assets tax free to his spouse prior to the calculation of estate tax owed by his estate.

How Does Marital Deduction Work?

The marital deduction is also known as the unlimited marital deduction.

The IRS treats a married couple as one economic entity. Estate tax is imposed only upon the demise of that economic entity. The marital deduction from the estate tax due is allowed upon the death of either husband or wife, as long as the spouse is a US citizen.

Upon the death of the surviving spouse, the entire remaining estate is taxed. Certain tax planning strategies are available to minimize this total effect.

Why Does Marital Deduction Matter?

This marital deduction is important to take into estate planning considerations as the estate tax due on the entire estate of the husband and the wife is postponed until the demise of both.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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