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).
Keywords: Minnesota Marital Deduction Trust, Lifetime Income, Power of Appointment, Beneficiary Spouse, Residuary Trust. The Minnesota Marital Deduction Trust with Lifetime Income and Power of Appointment in the Beneficiary Spouse and Residuary Trust is a legal mechanism that allows individuals to minimize estate taxes while providing for their spouse and preserving assets for future generations. This trust, available in Minnesota, offers several types based on specific needs and goals. 1. Basic Minnesota Marital Deduction Trust: The basic version of this trust allows individuals to transfer assets to their spouse upon their death without incurring any estate taxes. The spouse receives lifetime income from the trust while preserving the principal for the beneficiaries named in the residuary trust. 2. TIP Trust (Qualified Terminable Interest Property Trust): A TIP trust is utilized when individuals want to leave assets to their spouse while ensuring that the assets ultimately pass to specific beneficiaries, such as children from a previous marriage. The spouse receives lifetime income, and upon their death, the assets pass to the beneficiaries named in the residuary trust. 3. Credit Shelter Trust or Bypass Trust: This type of trust maximizes the use of the estate tax exemption by setting aside a predetermined amount of assets that will not be subject to estate taxes upon the death of the first spouse. The surviving spouse can still receive income from the trust, while the remaining assets ultimately pass to the beneficiaries named in the residuary trust. 4. AB Trust or Marital and Family Trust: The AB trust or Marital and Family Trust involves splitting assets between two trusts upon the first spouse's death. The surviving spouse can access income and even principal from the marital trust while preserving the assets in the family trust for the benefit of the beneficiaries named in the residuary trust. 5. Disclaimer Trust: A disclaimer trust allows the surviving spouse to decline some or all of the inherited assets. By doing so, these assets pass into a trust and are distributed according to the deceased spouse's predetermined wishes. This type of trust provides flexibility for the surviving spouse to adjust their financial situation and estate planning strategies. In conclusion, the Minnesota Marital Deduction Trust with Lifetime Income and Power of Appointment in the Beneficiary Spouse and Residuary Trust is a powerful estate planning tool available to Minnesota residents. Depending on individual circumstances and goals, different types of trust structures can be utilized to ensure tax efficiency, provide for the surviving spouse, and preserve assets for future generations.Keywords: Minnesota Marital Deduction Trust, Lifetime Income, Power of Appointment, Beneficiary Spouse, Residuary Trust. The Minnesota Marital Deduction Trust with Lifetime Income and Power of Appointment in the Beneficiary Spouse and Residuary Trust is a legal mechanism that allows individuals to minimize estate taxes while providing for their spouse and preserving assets for future generations. This trust, available in Minnesota, offers several types based on specific needs and goals. 1. Basic Minnesota Marital Deduction Trust: The basic version of this trust allows individuals to transfer assets to their spouse upon their death without incurring any estate taxes. The spouse receives lifetime income from the trust while preserving the principal for the beneficiaries named in the residuary trust. 2. TIP Trust (Qualified Terminable Interest Property Trust): A TIP trust is utilized when individuals want to leave assets to their spouse while ensuring that the assets ultimately pass to specific beneficiaries, such as children from a previous marriage. The spouse receives lifetime income, and upon their death, the assets pass to the beneficiaries named in the residuary trust. 3. Credit Shelter Trust or Bypass Trust: This type of trust maximizes the use of the estate tax exemption by setting aside a predetermined amount of assets that will not be subject to estate taxes upon the death of the first spouse. The surviving spouse can still receive income from the trust, while the remaining assets ultimately pass to the beneficiaries named in the residuary trust. 4. AB Trust or Marital and Family Trust: The AB trust or Marital and Family Trust involves splitting assets between two trusts upon the first spouse's death. The surviving spouse can access income and even principal from the marital trust while preserving the assets in the family trust for the benefit of the beneficiaries named in the residuary trust. 5. Disclaimer Trust: A disclaimer trust allows the surviving spouse to decline some or all of the inherited assets. By doing so, these assets pass into a trust and are distributed according to the deceased spouse's predetermined wishes. This type of trust provides flexibility for the surviving spouse to adjust their financial situation and estate planning strategies. In conclusion, the Minnesota Marital Deduction Trust with Lifetime Income and Power of Appointment in the Beneficiary Spouse and Residuary Trust is a powerful estate planning tool available to Minnesota residents. Depending on individual circumstances and goals, different types of trust structures can be utilized to ensure tax efficiency, provide for the surviving spouse, and preserve assets for future generations.
