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In estate planning, a marital deduction helps to reduce the taxes owed on the deceased's estate. To make a marital deduction, the executor of an estate will total all assets and properties of the deceased's estate, and then subtract the total of all assets and properties that are left to the surviving spouse. There are then only taxes owed on the rest of the estate, and not at all on the estate left to the surviving spouse. Being able to have a estate planning marital deduction can significantly reduce estate taxes.
Many people leave their entire estate to their spouse, so that they can claim all assets and properties under the estate planning marital deduction allowance. There is no limit on estate planning marital deductions, thus the entirety of one's estate could fall under marital deductions, making it essentially tax-free. However, there are a few issues with this.
First, all properties and assets will eventually be taxed at the time of the spouse's death if it remains in his or her estate. Second, each individual is allowed a credit known as the "state tax exemption equivalent" that allows them to avoid estate taxes of up to $3.5 million of property and assets left to non-spouses. When someone leaves all properties and assets to their spouse so they can claim it under estate planning marital deductions, the "state tax exemption equivalent" credit of the deceased spouse is lost. Thus, the surviving spouse will have to plan for both his or her own estate as well as the estate left by his or her deceased spouse. The $3.5 million in credit may not be enough to cover the combined estates.
Another problem may arise if an individual leaves their entire estate to their spouse, so that they can claim the estate planning marital deductions, and he or she assumes that the spouse will then distribute the assets to other members of the family according to his or her wishes. Unfortunately, however, the surviving spouse may not follow through with those wishes if he or she is in full control of the estate.
Before using estate planning marital deductions to reduce your estate taxes, it would be wise to speak with an estate planning attorney. An estate planning attorney can help you claim your estate planning marital deductions in a way that will be most advantageous to you and your family. Estate planning attorneys can help you see the benefits and drawbacks of marital deductions. An estate attorney can also help you plan for marital deductions and advise you on how to best reduce your estate taxes before your death, so that you can make the right choices when creating your will or trust.
Estate planning lawyers understand the complexity of estate planning marital deductions and estate taxes. If you need an experienced estate planning lawyer, contact Attorney Search Network today. We can help you find an estate planning lawyer to assist you with estate planning marital deductions.
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