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 Phoenix Arizona Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specific type of trust commonly used in estate planning to provide for a surviving spouse while also ensuring that the assets are ultimately distributed according to the wishes of the trust creator. In this trust, the primary beneficiary is the surviving spouse, who is entitled to receive income from the trust for his or her lifetime. The trust is designed to take advantage of the marital deduction, which allows the unlimited transfer of assets between spouses without incurring estate or gift taxes. Additionally, the surviving spouse is given the power of appointment, granting them the authority to determine the ultimate distribution of the trust's assets upon their death. This power can be exercised to include other beneficiaries such as children or other family members. Another essential feature of this trust is the residuary trust. This portion of the trust is created to hold the remaining assets not distributed to the surviving spouse or other appointed beneficiaries. The residuary trust ensures that any assets not utilized during the surviving spouse's lifetime are managed and distributed according to the trust creator's wishes. Different variations of Phoenix Arizona Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust include: 1. Irrevocable Trust: This type of trust cannot be altered or revoked by the trust creator once it is established. It provides more control over the distribution of assets and can offer potential tax benefits. 2. Revocable Trust: Unlike an irrevocable trust, a revocable trust allows the trust creator to modify or revoke the trust during their lifetime. This type of trust offers greater flexibility but may not provide as many tax advantages. 3. TIP Trust: Short for "Qualified Terminable Interest Property Trust," a TIP trust allows the trust creator to provide for a surviving spouse while still maintaining control over the ultimate distribution of the assets. This type of trust is often used in blended families or situations where there are children from previous relationships. 4. Credit Shelter Trust: Also known as a "Family Trust" or "Bypass Trust," a credit shelter trust is designed to maximize the use of both spouses' estate tax exemptions. It allows the trust creator to shelter a portion of their assets from estate taxes while still providing for the surviving spouse. Overall, a Phoenix Arizona Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust offers a comprehensive estate planning solution for individuals in Phoenix, Arizona. By utilizing these trusts, individuals can ensure their assets are protected, their spouse is provided for, and their wishes are respected regarding the distribution of their wealth.A Phoenix Arizona Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specific type of trust commonly used in estate planning to provide for a surviving spouse while also ensuring that the assets are ultimately distributed according to the wishes of the trust creator. In this trust, the primary beneficiary is the surviving spouse, who is entitled to receive income from the trust for his or her lifetime. The trust is designed to take advantage of the marital deduction, which allows the unlimited transfer of assets between spouses without incurring estate or gift taxes. Additionally, the surviving spouse is given the power of appointment, granting them the authority to determine the ultimate distribution of the trust's assets upon their death. This power can be exercised to include other beneficiaries such as children or other family members. Another essential feature of this trust is the residuary trust. This portion of the trust is created to hold the remaining assets not distributed to the surviving spouse or other appointed beneficiaries. The residuary trust ensures that any assets not utilized during the surviving spouse's lifetime are managed and distributed according to the trust creator's wishes. Different variations of Phoenix Arizona Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust include: 1. Irrevocable Trust: This type of trust cannot be altered or revoked by the trust creator once it is established. It provides more control over the distribution of assets and can offer potential tax benefits. 2. Revocable Trust: Unlike an irrevocable trust, a revocable trust allows the trust creator to modify or revoke the trust during their lifetime. This type of trust offers greater flexibility but may not provide as many tax advantages. 3. TIP Trust: Short for "Qualified Terminable Interest Property Trust," a TIP trust allows the trust creator to provide for a surviving spouse while still maintaining control over the ultimate distribution of the assets. This type of trust is often used in blended families or situations where there are children from previous relationships. 4. Credit Shelter Trust: Also known as a "Family Trust" or "Bypass Trust," a credit shelter trust is designed to maximize the use of both spouses' estate tax exemptions. It allows the trust creator to shelter a portion of their assets from estate taxes while still providing for the surviving spouse. Overall, a Phoenix Arizona Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust offers a comprehensive estate planning solution for individuals in Phoenix, Arizona. By utilizing these trusts, individuals can ensure their assets are protected, their spouse is provided for, and their wishes are respected regarding the distribution of their wealth.
