DEFINITION of 'Unlimited Marital Deduction'

A provision in United States Federal Estate and Gift Tax Law that allows an individual to transfer an unrestricted amount of assets to his or her spouse at any time, including at the death of the transferor, free from tax. The unlimited marital deduction is considered an estate preservation tool because assets can be distributed to surviving spouses without incurring estate or gift tax liabilities.

BREAKING DOWN 'Unlimited Marital Deduction'

Any asset that is transferred to a surviving spouse can be included in the spouse's taxable estate unless it is spent or gifted during the surviving spouse's lifetime. Alternatively, if the surviving spouse remarries, the unlimited marital deduction may allow the assets to pass to his or her surviving spouse without the application of estate and/or gift taxes. In some situations less taxes will be paid by using other estate planning methods such as using exemptions or trusts.

The unlimited marital deduction applies only to surviving spouses that are United States citizens. A qualified domestic trust (or QDOT) may be obtained to provide unlimited marital deductions for non-qualified spouses.

  1. Marital Deduction

    A tax deduction that allows an individual to transfer some assets ...
  2. A-B Trust

    An A-B trust is a joint trust created by a married couple for ...
  3. Qualified Terminable Interest Property ...

    A qualified terminable interest property (QTIP) is an irrevocable ...
  4. Form 8857: Request For Innocent ...

    An IRS tax form used by taxpayers to request relief from a tax ...
  5. Credit Shelter Trust - CST

    A Credit Shelter Trust allows a surviving spouse to pass on assets ...
  6. Will Variation

    A provision that allows a surviving spouse and/or children to ...
Related Articles
  1. Retirement

    Top 7 Estate Planning Mistakes

    Many people try to avoid this process altogether, making things difficult for heirs.
  2. Taxes

    What the Gift Tax Rules Mandate

    The lifetime maximum for gift taxes is now $5.6 million. Here's how the gift tax works.
  3. Financial Advisor

    Estate Plans Should Include Instruction Manuals

    Death is not something that we wish to dwell on, but estate planning—and figuring out even more basic issues—is something we definitely should not avoid.
  4. Financial Advisor

    How Life Insurance Can Help Reduce Estate Taxes

    Inheritance is a double-edged sword, as leaving money can create estate tax burdens. Opting for a life insurance plan can help mitigate those burdens.
  5. Taxes

    Estate Taxes: Who's on the Hook?

    Inheritance taxes can be tricky. Most people have to deal with them at a very inconvenient time. It's better to learn the laws now so you're ready later.
  6. Retirement

    Estate Planning and Elderly and Passed Clients

    By keeping up with new estate tax rules, financial advisors can help elderly clients save big on tax costs.
  7. Retirement

    Estate Planning For Canadians

    Trusts, wills, taxes and rules differ by country. Find out what you need to know about estate plans in Canada.
  8. Retirement

    How to Minimize Estate Taxes via Charitable Giving

    Here are several ways to reduce your taxable estate while providing a gift to a worthwhile cause.
  9. Taxes

    4 Ways To Minimize Estate Taxes

    These four strategies will ensure that most of your money goes to your loved ones, and not to the government.
  1. How can a trust lower federal transfer tax liability?

    A trust is an arrangement in which an individual or entity controls property or funds on behalf of someone else without actually ... Read Answer >>
Hot Definitions
  1. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  2. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  3. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  4. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  5. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
  6. Restricted Stock Unit - RSU

    A restricted stock unit is a compensation issued by an employer to an employee in the form of company stock.
Trading Center