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).
Indiana Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a type of trust arrangement that allows married individuals in Indiana to provide for their spouse and ensure the orderly distribution of their assets upon their passing. This estate planning tool combines the benefits of the Marital Deduction Trust, Lifetime Income Trust, Power of Appointment, and Residuary Trust. The Indiana Marital Deduction Trust aims to minimize estate tax liabilities by taking advantage of the unlimited marital deduction. When the creator of the trust, also known as the granter or settler, passes away, their assets are placed into this trust. The trust is irrevocable, meaning that once it is established, the granter cannot alter its terms or remove assets from it. The primary beneficiary of the Indiana Marital Deduction Trust is the surviving spouse. This arrangement ensures that the spouse is provided for during their lifetime. The trust provides income to the surviving spouse for the remainder of their life, which can include distributions of interest, dividends, rental income, or other types of income generated by trust assets. The surviving spouse also holds the power of appointment over the trust assets. This means that they have the authority to designate who will receive the remaining assets upon their death. The power of appointment allows the surviving spouse to consider changing circumstances, such as the birth or death of a beneficiary, and allocate trust assets accordingly. The Residuary Trust component of the Indiana Marital Deduction Trust refers to the trust structure that preserves and distributes the remaining assets upon the death of the surviving spouse. The granter can designate specific individuals, such as children or other beneficiaries, to receive the assets remaining in the trust after the death of the surviving spouse. Depending on the preferences and needs of the individual creating the trust, there may be variations of the Indiana Marital Deduction Trust. Some notable types include: 1. Qualified Terminable Interest Property (TIP) Trust: This trust arrangement is similar to the standard Indiana Marital Deduction Trust but includes additional provisions that allow the granter to direct the ultimate distribution of trust assets after the death of the surviving spouse. 2. Charitable Marital Deduction Trust: For individuals who wish to provide for their spouse and support charitable organizations, this trust structure allows for donations to be made from the trust income while the surviving spouse is alive. 3. Special Needs Marital Deduction Trust: This type of trust is designed to preserve government assistance for a disabled beneficiary while providing for the needs of the surviving spouse, ensuring their financial security. In conclusion, the Indiana Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a comprehensive estate planning tool that enables individuals in Indiana to provide for their spouse while efficiently managing their assets and minimizing estate tax liabilities. Personal circumstances and goals may determine which specific type of this trust is most suitable for a granter's needs.Indiana Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a type of trust arrangement that allows married individuals in Indiana to provide for their spouse and ensure the orderly distribution of their assets upon their passing. This estate planning tool combines the benefits of the Marital Deduction Trust, Lifetime Income Trust, Power of Appointment, and Residuary Trust. The Indiana Marital Deduction Trust aims to minimize estate tax liabilities by taking advantage of the unlimited marital deduction. When the creator of the trust, also known as the granter or settler, passes away, their assets are placed into this trust. The trust is irrevocable, meaning that once it is established, the granter cannot alter its terms or remove assets from it. The primary beneficiary of the Indiana Marital Deduction Trust is the surviving spouse. This arrangement ensures that the spouse is provided for during their lifetime. The trust provides income to the surviving spouse for the remainder of their life, which can include distributions of interest, dividends, rental income, or other types of income generated by trust assets. The surviving spouse also holds the power of appointment over the trust assets. This means that they have the authority to designate who will receive the remaining assets upon their death. The power of appointment allows the surviving spouse to consider changing circumstances, such as the birth or death of a beneficiary, and allocate trust assets accordingly. The Residuary Trust component of the Indiana Marital Deduction Trust refers to the trust structure that preserves and distributes the remaining assets upon the death of the surviving spouse. The granter can designate specific individuals, such as children or other beneficiaries, to receive the assets remaining in the trust after the death of the surviving spouse. Depending on the preferences and needs of the individual creating the trust, there may be variations of the Indiana Marital Deduction Trust. Some notable types include: 1. Qualified Terminable Interest Property (TIP) Trust: This trust arrangement is similar to the standard Indiana Marital Deduction Trust but includes additional provisions that allow the granter to direct the ultimate distribution of trust assets after the death of the surviving spouse. 2. Charitable Marital Deduction Trust: For individuals who wish to provide for their spouse and support charitable organizations, this trust structure allows for donations to be made from the trust income while the surviving spouse is alive. 3. Special Needs Marital Deduction Trust: This type of trust is designed to preserve government assistance for a disabled beneficiary while providing for the needs of the surviving spouse, ensuring their financial security. In conclusion, the Indiana Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a comprehensive estate planning tool that enables individuals in Indiana to provide for their spouse while efficiently managing their assets and minimizing estate tax liabilities. Personal circumstances and goals may determine which specific type of this trust is most suitable for a granter's needs.
