For estate tax purposes, the lack of a
marital deduction for transfers to a noncitizen spouse means that all of the assets in the resident spouse's estate that pass to the noncitizen spouse will be taxable.
Moving forward, the estates of same-sex spouses will be able to use the
marital deduction.
If the tax return is for a married couple and they are married tiling separate, determine if there are also separate property considerations that can affect the
marital deduction.
2006-26 the IRS held that a
marital deduction will not be allowed for a trust that is a beneficiary of a retirement plan if it is drafted to follow the 10% rule.
The residuary trust qualifies for the estate tax
marital deduction, pursuant to IRC [section]2056(b)(7).
Pursuant to IRC Section 2056(d)(1) as a general rule, an estate tax
marital deduction is denied for property passing to a surviving spouse who is not a United States citizen.
To satisfy the QDOT rules and obtain the
marital deduction, not only does the property have to be transferred to a QDOT and a timely election made on the estate tax return, but the
marital deduction trust requirements must also be satisfied.
A Practical Guide to Drafting
Marital Deduction Trusts (with Sample Forms and Checklists) is available for $199 from The American Law Institute-American Bar Association's Web site at www.
2056(b)(7) to treat the property transferred to the residual trust as qualified terminable interest property (the QTIP election), thus qualifying the property for the
marital deduction.
The Ninth Circuit Court of Appeals recently upheld a district court's decision that a self-prepared will's bequest qualified for the
marital deduction, even though its literal wording created a disqualifying terminable interest.
The first decision is whether the estate should elect the
marital deduction for the homestead on the decedent's estate tax return.
Working papers contain revised client interview forms, wills and trusts, including several for specialized situations, such as
marital deduction trusts, by-pass trusts and Crummey powers.
