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).
The Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a type of trust commonly used in estate planning to provide financial security for a surviving spouse while ensuring flexibility and control over the remaining assets. When setting up a Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust, the granter (the person establishing the trust) transfers assets into the trust, which is then managed by a trustee. The primary beneficiary of this trust is usually the granter's spouse. The primary purpose of this trust is to take advantage of the marital deduction allowed under Wisconsin law for estate tax purposes. By placing assets in this trust, they are not included in the calculation of the granter's taxable estate upon their passing. This allows for potential tax savings and allows the assets to be passed on to the surviving spouse without creating severe tax liabilities. The key feature of this trust is the provision for the surviving spouse's lifetime income. The trustee is required to distribute a regular income stream from the trust's assets to the surviving spouse for their entire lifetime. This ensures that the surviving spouse will have financial security and a reliable source of income even after the granter's passing. Additionally, the surviving spouse is given a power of appointment over the trust's assets. This means that they have the authority to designate who will receive the remaining trust assets after their passing. This power of appointment can be a valuable tool for the surviving spouse to ensure that the assets pass to their desired beneficiaries, such as children or grandchildren. If there are different types of Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust, they may include variations in the provisions regarding the distribution of income, the terms of the power of appointment, or specific restrictions or conditions imposed by the granter. Some potential variations include: 1. Wisconsin Marital Deduction Trust with Fixed Lifetime Income and Limited Power of Appointment: In this type of trust, the surviving spouse receives a predetermined fixed income amount during their lifetime. The power of appointment may be limited to a specific class of beneficiaries or include specific instructions regarding the distribution of remaining assets. 2. Wisconsin Marital Deduction Trust with Discretionary Lifetime Income and Broad Power of Appointment: This trust provides the trustee with discretion in determining the amount and timing of income distributions to the surviving spouse. The power of appointment granted to the spouse can be broad, allowing them to determine the ultimate beneficiaries of the trust assets. 3. Wisconsin Marital Deduction Trust with Charitable Remainder and Power of Appointment: This variation incorporates a charitable remainder beneficiary, meaning that a certain portion of the trust's assets will eventually pass to a charitable organization. The surviving spouse retains the power of appointment over the remaining assets not allocated to the charitable beneficiary. 4. Wisconsin Marital Deduction Trust with Qualified Terminable Interest Property (TIP) Election and Power of Appointment: This trust provides the surviving spouse with a qualified terminable interest, allowing them to receive income from the trust for life. They also hold the power of appointment, providing flexibility in determining the ultimate beneficiaries of the remaining assets. In conclusion, the Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a versatile estate planning tool that allows the granter to provide financial security for their spouse while maintaining control and flexibility over the remaining assets. The different variations of this trust can be tailored to individual circumstances and objectives, ensuring that the granter's wishes are upheld and their loved ones are provided for.The Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a type of trust commonly used in estate planning to provide financial security for a surviving spouse while ensuring flexibility and control over the remaining assets. When setting up a Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust, the granter (the person establishing the trust) transfers assets into the trust, which is then managed by a trustee. The primary beneficiary of this trust is usually the granter's spouse. The primary purpose of this trust is to take advantage of the marital deduction allowed under Wisconsin law for estate tax purposes. By placing assets in this trust, they are not included in the calculation of the granter's taxable estate upon their passing. This allows for potential tax savings and allows the assets to be passed on to the surviving spouse without creating severe tax liabilities. The key feature of this trust is the provision for the surviving spouse's lifetime income. The trustee is required to distribute a regular income stream from the trust's assets to the surviving spouse for their entire lifetime. This ensures that the surviving spouse will have financial security and a reliable source of income even after the granter's passing. Additionally, the surviving spouse is given a power of appointment over the trust's assets. This means that they have the authority to designate who will receive the remaining trust assets after their passing. This power of appointment can be a valuable tool for the surviving spouse to ensure that the assets pass to their desired beneficiaries, such as children or grandchildren. If there are different types of Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust, they may include variations in the provisions regarding the distribution of income, the terms of the power of appointment, or specific restrictions or conditions imposed by the granter. Some potential variations include: 1. Wisconsin Marital Deduction Trust with Fixed Lifetime Income and Limited Power of Appointment: In this type of trust, the surviving spouse receives a predetermined fixed income amount during their lifetime. The power of appointment may be limited to a specific class of beneficiaries or include specific instructions regarding the distribution of remaining assets. 2. Wisconsin Marital Deduction Trust with Discretionary Lifetime Income and Broad Power of Appointment: This trust provides the trustee with discretion in determining the amount and timing of income distributions to the surviving spouse. The power of appointment granted to the spouse can be broad, allowing them to determine the ultimate beneficiaries of the trust assets. 3. Wisconsin Marital Deduction Trust with Charitable Remainder and Power of Appointment: This variation incorporates a charitable remainder beneficiary, meaning that a certain portion of the trust's assets will eventually pass to a charitable organization. The surviving spouse retains the power of appointment over the remaining assets not allocated to the charitable beneficiary. 4. Wisconsin Marital Deduction Trust with Qualified Terminable Interest Property (TIP) Election and Power of Appointment: This trust provides the surviving spouse with a qualified terminable interest, allowing them to receive income from the trust for life. They also hold the power of appointment, providing flexibility in determining the ultimate beneficiaries of the remaining assets. In conclusion, the Wisconsin Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a versatile estate planning tool that allows the granter to provide financial security for their spouse while maintaining control and flexibility over the remaining assets. The different variations of this trust can be tailored to individual circumstances and objectives, ensuring that the granter's wishes are upheld and their loved ones are provided for.
