Seven requirements must be met for an interest to qualify for the federal estate tax marital deduction:
1.The decedent must be legally married at the time of his or her death;
2.The person to whom the decedent is legally married at the time of his or her death must survive the decedent;
3.The surviving spouse must be a U.S. citizen (or the property must be held in a Qualified Domestic Trust.
4.The interest passing to the surviving spouse must be includable in the decedentýs gross estate in the United States;
5.The interest must pass to the surviving spouse;
6.The interest received by the surviving spouse must be a deductible interest; and
7.The value of the interest passing to the surviving spouse must be at its net value.
An interest is nondeductible to the extent that it is not includable in the decedentýs gross estate. A marital deduction will not be allowed for property that is otherwise deductible as an expense, claim or loss. No double deduction is permitted. Thus, an interest cannot qualify for the marital deduction if it otherwise is deducted under either IRC Section 2053 or Section 2054. IRC Section 2056(b)(9). For example, no marital deduction is allowed for property that passes to the surviving spouse that is used by the estate to pay the decedentýs funeral expenses.
Section 2056(c) of the IRC defines passing to include interests acquired by the surviving spouse by will, intestate succession, dower, curtesy, statutory share, right of survivorship, the exercise or default of exercise of a power of appointment, or pursuant to a life insurance beneficiary designation. The passing requirement also can be satisfied by designating the surviving spouse as the beneficiary of employee death benefits or any other annuity includable in the decedentýs gross estate under IRC Section 2039. (Treas. Reg. §20.2056(c)-1, 2, 3).
A West Virginia Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a legal arrangement that allows individuals in West Virginia to provide financial security for their spouse after their death while maintaining control over the distribution of their assets. This trust is commonly used as an estate planning tool to minimize estate taxes and ensure the financial well-being of the surviving spouse. The primary feature of this trust is the lifetime income provision, where the surviving spouse receives regular income from the trust's assets for the remainder of their life. This income can be essential in ensuring the spouse's financial stability, covering living expenses, healthcare costs, and maintaining their quality of life. Additionally, the trust includes a power of appointment provision, allowing the surviving spouse to determine how the remaining trust assets will be distributed upon their death. This power grants the spouse flexibility in distributing the assets among beneficiaries such as children, grandchildren, or other loved ones, based on their individual needs and circumstances. Furthermore, the West Virginia Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust creates a residuary trust. This trust holds any remaining assets not distributed during the surviving spouse's lifetime. The residuary trust can be designed to provide continued income and financial security for beneficiaries named by the surviving spouse, following their passing. Different types of West Virginia Marital Deduction Trusts with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust may include variations in the specific terms and conditions set by the granter (the person establishing the trust). These variations may depend on factors such as the size of the estate, the specific financial needs and goals of the surviving spouse, and the desired distribution of assets upon the death of both spouses. To summarize, a West Virginia Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specialized estate planning tool that provides financial security to a surviving spouse while allowing the granter to retain control over asset distribution. The lifetime income provision ensures regular payments to cover the spouse's needs, while the power of appointment gives flexibility in determining the ultimate beneficiaries of the trust. The creation of a residuary trust ensures the continued financial well-being of the named beneficiaries after the surviving spouse's passing.
