What is a marital deduction trust?
A marital deduction trust is a type of trust used in inheritance law in Indiana. The purpose of the trust is to allow married couples to pass assets to each other without incurring federal estate taxes. Typically, when one spouse dies, the surviving spouse has to pay taxes on the inheritance, which can significantly reduce the amount of money they receive. With a marital deduction trust, the assets are divided into two trusts- one is the marital trust, and the other is the non-marital trust. The marital trust is funded with assets belonging to the first spouse to die, and the non-marital trust is funded with assets belonging to the surviving spouse. The marital trust is exempt from federal estate taxes, meaning that the surviving spouse does not have to pay taxes on the assets from the first spouse. The marital deduction trust is beneficial because it allows married couples to pass on assets to one another without incurring large taxes. This can help the surviving spouse maintain their lifestyle, and also prevent the assets from being depleted by taxes. The trust can also be used to provide for a spouse’s care during their lifetime. Marital deduction trusts are an important tool when it comes to inheritance law in Indiana. It is important to understand the laws and rules in order to make sure the trust is set up correctly and will provide the intended benefits. Consulting with an experienced estate attorney can help ensure that your trust is established and administered correctly.
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