What is a Marital Deduction?

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  • Written By: wiseGEEK Writer
  • Edited By: O. Wallace
  • Last Modified Date: 14 August 2019
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In many instances, when people give other people large sums of money or valuable property either while living or in a will, those on the receiving end may have to pay a tax. Though the amount of tax and circumstances under which it is due tend to vary by region, usually someone pays a percentage of what they receive. With a marital deduction, which is popular in places like the US, certain forms of gifts and inheritance may not be taxed if these flow from one spouse to the other.

When considered, a marital deduction makes a certain amount of sense. If a husband asks a wife for $15,000 US Dollars (USD) to buy a car, it would seem unreasonable that the wife writing a check for the amount means the husband has to pay taxes. In contrast, if the wife was writing a check for a slightly higher amount to a child or to a friend, she might have to pay gift taxes or the person receiving the check would. Technically, both wife and husband, while living, share most of their assets, and in some states they are both entitled upon divorce to half of everything owned. Essentially, property in the marriage doesn’t get taxed if it moves between the spouses, though this is variable and can sometimes have regional differences that should be researched.


Where the idea of marital deduction often gets utilized the most is when one spouse predeceases the other. In these instances, the business of figuring out what forms of the inheritance are taxable often depends on this deduction. Most of the time, things like liquid assets and property are exempt from any form of taxation. They very logically flow to the surviving spouse who has become the sole owner of them.

Sometimes the marital deduction gets more complicated because wills can leave some property to other people like adult children, friends, foundations, and et cetera. Usually, the things inherited by the spouse can’t be taxed, and this is a means of avoiding financial hardship by having to pay things like heavy estate taxes. It would be extremely undesirable to subject a widow or widower to reduced financial circumstances by levying huge taxes upon them for surviving a husband or wife. Since property was owned in a joint fashion prior to a spouse’s death, it doesn’t make sense to tax it.

At first glance, a marital deduction seems easy to understand, but people make mistakes in assuming it will always apply. Especially as the amount one spouse might inherit from another climbs, it is valuable to have an expert in estate planning to explain all potential variations in the law that might occur. Assumption that this form of inheritance will always go smoothly is not wise and people are encouraged to seek professional advice on how to best construct dispensation of their property to spouses, children, and others.



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