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 Kentucky Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specific type of trust established under Kentucky state law. This trust is designed to provide financial support and flexibility for married couples in estate planning and asset distribution. Here is a detailed description of this trust, along with some related variations: 1. Kentucky Marital Deduction Trust: A marital deduction trust allows one spouse to transfer assets to a trust for the benefit of the surviving spouse while minimizing estate taxes. It provides tax advantages by utilizing the unlimited marital deduction, which allows assets to pass to the surviving spouse free of estate taxes. 2. Lifetime Income: The Kentucky Marital Deduction Trust with Lifetime Income ensures that the surviving spouse receives a stream of income from the trust for their lifetime. This provides financial security and ongoing support, even after the death of the spouse that established the trust. 3. Power of Appointment: This trust includes a power of appointment provision, granting the surviving spouse the authority to distribute the trust assets among their chosen beneficiaries, including themselves. This power allows the surviving spouse to have control and flexibility over the distribution of the trust assets. 4. Beneficiary Spouse: The beneficiary spouse refers to the surviving spouse who will receive income and potentially exercise the power of appointment within the trust. They are the primary recipient of the trust benefits and have the ability to direct the trust's assets according to their wishes. 5. Residuary Trust: The Kentucky Marital Deduction Trust with a Residuary Trust is an additional component added to the trust structure. The residuary trust is created to receive any remaining assets not distributed by the beneficiary spouse during their lifetime. This allows for the preservation and management of assets for future generations or designated beneficiaries. In summary, a Kentucky Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specialized estate planning tool that provides tax benefits, lifetime income for the surviving spouse, and the ability to direct the distribution of assets. It ensures financial security and flexibility in asset distribution.A Kentucky Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specific type of trust established under Kentucky state law. This trust is designed to provide financial support and flexibility for married couples in estate planning and asset distribution. Here is a detailed description of this trust, along with some related variations: 1. Kentucky Marital Deduction Trust: A marital deduction trust allows one spouse to transfer assets to a trust for the benefit of the surviving spouse while minimizing estate taxes. It provides tax advantages by utilizing the unlimited marital deduction, which allows assets to pass to the surviving spouse free of estate taxes. 2. Lifetime Income: The Kentucky Marital Deduction Trust with Lifetime Income ensures that the surviving spouse receives a stream of income from the trust for their lifetime. This provides financial security and ongoing support, even after the death of the spouse that established the trust. 3. Power of Appointment: This trust includes a power of appointment provision, granting the surviving spouse the authority to distribute the trust assets among their chosen beneficiaries, including themselves. This power allows the surviving spouse to have control and flexibility over the distribution of the trust assets. 4. Beneficiary Spouse: The beneficiary spouse refers to the surviving spouse who will receive income and potentially exercise the power of appointment within the trust. They are the primary recipient of the trust benefits and have the ability to direct the trust's assets according to their wishes. 5. Residuary Trust: The Kentucky Marital Deduction Trust with a Residuary Trust is an additional component added to the trust structure. The residuary trust is created to receive any remaining assets not distributed by the beneficiary spouse during their lifetime. This allows for the preservation and management of assets for future generations or designated beneficiaries. In summary, a Kentucky Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specialized estate planning tool that provides tax benefits, lifetime income for the surviving spouse, and the ability to direct the distribution of assets. It ensures financial security and flexibility in asset distribution.
