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 Colorado Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a type of trust established within the state of Colorado that offers various benefits and provisions for married couples. This trust is designed to provide financial security and flexibility for the surviving spouse while ensuring that the remaining assets are properly distributed according to the wishes of the granter. The primary feature of this trust is the Marital Deduction, which allows for the transfer of assets from one spouse to another without incurring any estate or gift taxes. By utilizing this deduction, the trust allows the surviving spouse to receive a lifetime income from the trust assets while maintaining control over the distribution of these assets upon their death. Within the Colorado Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust, there may be different variations based on specific circumstances or preferences. Some of these variations include: 1. Traditional Marital Deduction Trust: This is the most basic form of the trust, where the surviving spouse receives a lifetime income from the trust assets while having the ability to appoint the remaining assets to other beneficiaries upon their death. 2. Special Needs Marital Deduction Trust: This trust is designed for couples where one spouse has special needs or disabilities. It ensures that the surviving spouse receives income for their lifetime while also establishing provisions for the care and support of the disabled spouse. 3. Charitable Marital Deduction Trust: This trust allows the surviving spouse to receive a lifetime income from the trust assets while also providing an opportunity to make charitable donations or contributions from the remaining assets upon their death. 4. Qualified Terminable Interest Property (TIP) Trust: In this variation of the trust, the surviving spouse receives income from the trust assets for their lifetime, but they do not have the power to direct the disposition of the remaining assets. Instead, the granter specifies the beneficiaries who will ultimately receive the assets upon the death of the surviving spouse. Overall, the Colorado Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust provides a comprehensive solution for married couples seeking to ensure financial security for the surviving spouse while also establishing a clear framework for the distribution of assets upon their passing.A Colorado Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a type of trust established within the state of Colorado that offers various benefits and provisions for married couples. This trust is designed to provide financial security and flexibility for the surviving spouse while ensuring that the remaining assets are properly distributed according to the wishes of the granter. The primary feature of this trust is the Marital Deduction, which allows for the transfer of assets from one spouse to another without incurring any estate or gift taxes. By utilizing this deduction, the trust allows the surviving spouse to receive a lifetime income from the trust assets while maintaining control over the distribution of these assets upon their death. Within the Colorado Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust, there may be different variations based on specific circumstances or preferences. Some of these variations include: 1. Traditional Marital Deduction Trust: This is the most basic form of the trust, where the surviving spouse receives a lifetime income from the trust assets while having the ability to appoint the remaining assets to other beneficiaries upon their death. 2. Special Needs Marital Deduction Trust: This trust is designed for couples where one spouse has special needs or disabilities. It ensures that the surviving spouse receives income for their lifetime while also establishing provisions for the care and support of the disabled spouse. 3. Charitable Marital Deduction Trust: This trust allows the surviving spouse to receive a lifetime income from the trust assets while also providing an opportunity to make charitable donations or contributions from the remaining assets upon their death. 4. Qualified Terminable Interest Property (TIP) Trust: In this variation of the trust, the surviving spouse receives income from the trust assets for their lifetime, but they do not have the power to direct the disposition of the remaining assets. Instead, the granter specifies the beneficiaries who will ultimately receive the assets upon the death of the surviving spouse. Overall, the Colorado Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust provides a comprehensive solution for married couples seeking to ensure financial security for the surviving spouse while also establishing a clear framework for the distribution of assets upon their passing.
