What is a marital deduction and how does it work?

A marital deduction is a special estate planning law in Delaware that allows married couples to pass property to one another tax-free. This deduction means that when one spouse dies, the other spouse can receive property or assets from the deceased spouse without having to pay any income tax. This deduction applies only to married couples who file joint tax returns, so it does not apply to unmarried couples or to married couples who file their taxes separately. The marital deduction is based on a couple’s “bypass trust.” This trust allows the surviving spouse to use assets from the deceased spouse’s estate without any tax consequences. The trust is set up so that the balance in the trust is not taxed until the surviving spouse has either passed away or completely withdrawn the funds from the trust. In addition, the trust can also create additional income for the surviving spouse, depending on how it is set up. The marital deduction can be used to reduce the overall estate tax burden for married couples, and can create a financial cushion for the surviving spouse. This deduction can be extremely beneficial for those who have a large estate, and want to ensure that their spouse is taken care of after they pass away. It is important to note, however, that the marital deduction law in Delaware may change over time, so it is best to consult with a qualified estate planning attorney to help determine the best plan of action for your estate.

Related FAQs

What is a testamentary trust?
What is the difference between a living trust and a testamentary trust?
How can I ensure that my estate is distributed according to my wishes?
What happens to my assets if I die without a will?
What happens if I don't have an estate plan?
What should I do if I want to disinherit a beneficiary?
What are the tax implications of estate planning?
How should I choose an executor for my will?
What is a trust protector and what does it do?
What is the difference between a will and a trust?

What is a marital deduction and how does it work?

Related FAQs

Related Blog Posts