Marital deduction, also known as unlimited marital deduction, is one of the most improperly used and well-known estate tax reducers. Consult with your lawyer in Tampa to further understand how the marital deduction works and why the above statement is true. Some of the important features of the marital deduction are unlimited transfers and citizenship status restrictions. Many married couples leave their entire estate to their spouse but that could be a mistake. Look over your estate plan with your local Tampa lawyer when getting your affairs in order.
There is another important think to know about, it’s called an estate tax exemption. The amount for 2018 is $5.6 million. This exemption allows estate taxes to be avoided. However, the marital deduction only defers the taxes. The transferred property that the decedent’s spouse receives will be taxed upon that spouse’s death. Therefore, if there are children, they may get hit with the heavy tax burden. Again, consult with your local Tampa lawyer to make sure you plan for this.
When estate planning, look at the benefits to marital deduction combined with exemptions and trusts. You could benefit by paying less taxes and ensuring more of your assets are distributed to your intended recipients. Remember the important feature mentioned before about citizenship status? Well the unlimited marital deduction is only available to U.S. citizens. But, a qualified domestic trust (QDOT) can be obtained to allow non-qualified spouses to benefit. Naturally, there are stipulations and risks associated with QDOT. It would be wise to sit down with an estate planner to see the benefits before making any final decisions.
Estate planning can be very tricky. But it’s important to ensure that your assets are distributed as you wish. Using a combination of tax planning strategies, you can reduce the effects of the taxes on your estate. It is useful to know and understand how marital deduction works in estate planning in order to better prepare. Know that the estate tax is deferred and not eliminated.