Marital Trust

AAA

DEFINITION of 'Marital Trust'

A fiduciary relationship between a trustor and trustee for the benefit of a surviving spouse and the married couple's heirs. Also called an "A" trust, a marital trust goes into effect when the first spouse dies. Assets are moved into the trust upon death and the income generated by the assets goes to the surviving spouse. Under some arrangements, the surviving spouse can also receive principal payments. When the second spouse dies, the trust passes to its designated heirs.

INVESTOPEDIA EXPLAINS 'Marital Trust'

There are three types of marital trusts: a general power of appointment, a QTIP trust and an estate trust. A marital trust allows the couple's heirs to avoid probate and take less of a hit from estate taxes by taking full advantage of the unlimited marital deduction, which allows spouses to pass assets to each other without tax consequences. However, when the surviving spouse dies, the remaining trust assets will be subject to estate taxes. To further avoid estate taxes when the surviving spouse dies, a marital trust is sometimes used in conjunction with a credit shelter trust (also called a "B" trust).

An example of when a marital trust might be used is when a couple has children from a previous marriage and wants to pass all property to the surviving spouse upon death but provide for their individual children upon the surviving spouse's death. In case the surviving spouse remarries, the deceased spouse's assets will go to his or her children instead of to the new spouse.

RELATED TERMS
  1. Beneficial Interest

    The right to receive benefits on assets held by another party. ...
  2. Testamentary Trust

    A legal and fiduciary relationship created through explicit instructions ...
  3. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  4. Marital Deduction

    A tax deduction that allows an individual to transfer some assets ...
  5. Estate Tax

    A tax levied on an heir's inherited portion of an estate if the ...
  6. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
Related Articles
  1. Retirement

    Retirement: The One Thing Couples Shouldn't Do Together

    Staggering retirement can have both financial and emotional benefits for married couples.
  2. Budgeting

    Marriage: For Richer Or Poorer?

    Marriage can be like doubling an income, as long as you avoid doubling these expenses.
  3. Retirement

    Establishing A Revocable Living Trust

    This arrangement allows you to have more control over your estate - both before and after your death.
  4. Options & Futures

    New Option For Beneficiaries: Reversionary Annuities

    This vehicle can provide survivors with guaranteed income and lower premiums.
  5. Retirement

    Making Spousal IRA Contributions

    Eligibility requirements, contribution limits and tax deductions all change with one little ring.
  6. Retirement

    Why You Shouldn't Let Your Partner Do The Books

    One person often deals with the finances in a relationship, but being ignorant has a cost.
  7. Personal Finance

    Agency Theory

    An agency relationship exists when one person -- called a principal -- hires another person -- the agent -- to act on his behalf. Agency theory is concerned with resolving problems that develop ...
  8. Taxes

    What is the difference between gross income and earned income?

    Being able to distinguish between earned income and gross income is an important tool in preparing for and filing your individual tax returns each year.
  9. Taxes

    What is Value-Added Tax (VAT) and who pays it?

    Learn about the definition of value-added tax, the necessary circumstances that require a business to pay it and when a business is exempt.
  10. Budgeting

    Can trust funds be activated before the grantor intended?

    Trust law gives the grantor specific rights over the release of assets and therefore it is not possible to change the stipulations without his or her consent.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center