How are distributions from a marital trust taxed?

Upon the death of the trust grantor, trust assets pass on to the surviving spouse tax free. This means the IRS won't level federal estate taxes on those assets. So neither spouse owes taxes on the transfer.

What is a residuary marital trust?

The portion that isn't passing to your spouse (and thus won't be subject to estate tax in your spouse's estate) is often known as the Residuary Trust (though it's also called a bypass trust, a credit shelter trust, or other names).

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Marital-deduction Residuary Trust with a Single Trustor and Lifetime...

Montgomery Maryland Marital-deduction Residuary Trust with a Single Trustor and Lifetime Income and Power of Appointment in Beneficiary Spouse

Name: Montgomery Maryland Marital-deduction Residuary Trust with a Single Trustor and Lifetime Income and Power of Appointment in Beneficiary Spouse
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Trusts

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Montgomery

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US-1340834BG

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FAQ

A marital trust is a type of irrevocable trust that allows one spouse to transfer assets to a surviving spouse tax free, using the unlimited marital deduction, while providing benefits not available if transferred outright.

A power of appointment or power of appointment trust is a legally binding provision contained in a trust which gives a surviving spouse or other beneficiary the authority to change the ultimate beneficiaries of a trust.

It allows one marriage partner to transfer an unlimited amount of assets to his or her spouse without incurring a tax. The marital deduction is determinable from the overall gross estate. The total value of the assets passed on to the spouse is subtracted from that amount, giving us the marital deduction.

Upon the death of the trust grantor, trust assets pass on to the surviving spouse tax free. This means the IRS won't level federal estate taxes on those assets. So neither spouse owes taxes on the transfer.

For a married couple, the marital deduction/bypass trust, sometimes referred to as an AB trust, can take the form of a revocable living trust created by each spouse as grantor, or a joint revocable trust created by both spouses as grantors.

A Bypass Trust is a sub-Trust that becomes irrevocable after the first spouse dies. A Bypass Trust is sometimes called a Residual Trust, a Family Trust, or a Tax Avoidance Trust.

The effect of the marital deduction trust is that it shields both spouse's assets and estates from federal estate taxes because when the first spouse dies, the assets indicated by the settlor (the spouse who created the trust) pass to the marital trust free and clear of any and all federal estate taxes.

Two common trusts qualify for the marital deduction: power of appointment trusts and qualified terminable interest property (QTIP) trusts. An important difference between the two types of trusts concerns the surviving spouse's ability to appoint the stock to someone else during life or at death.

The portion that isn't passing to your spouse (and thus won't be subject to estate tax in your spouse's estate) is often known as the Residuary Trust (though it's also called a bypass trust, a credit shelter trust, or other names).

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Also called an "A" trust, a marital trust goes into effect when the first spouse dies.

Montgomery Maryland Marital-deduction Residuary Trust with a Single Trustor and Lifetime Income and Power of Appointment in Beneficiary Spouse

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What type of trust qualifies for a marital deduction?

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What is a general power of appointment marital trust?

How does the marital deduction work?

How are distributions from a marital trust taxed?

Is a marital deduction trust revocable?

What is a residual trust?

How does a marital deduction trust work?

Which trusts qualify for the marital deduction?

What is a residuary marital trust?

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