What is a marital deduction and how does it work?

A marital deduction is a type of tax exemption in estate planning law specifically relating to married couples in Maryland. In a nutshell, the marital deduction allows married spouses to pass assets to each other without paying taxes on those assets. This means that a spouse that survives their partner can inherit their partner’s property free of taxes. The way the marital deduction works is this: the surviving spouse can receive an unlimited amount of assets from the deceased spouse without paying any estate or gift taxes. In other words, if the deceased spouse leaves all their assets to the surviving spouse, no taxes are owed on those assets. This exempts most, if not all, of the couple’s estate from the federal estate tax. The tax-free passing of assets only applies to spouses, and not to other family members. However, if the assets passed to the surviving spouse are then passed on to their children, then those assets will be subject to taxation. The marital deduction in Maryland is an important and valuable tool for married couples who want to ensure that the surviving spouse can inherit their partner’s assets without being financially burdened by taxes. It is important for couples to talk to a certified estate planning lawyer to ensure that their assets are properly protected and that they are taking full advantage of the marital deduction available to them.

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