The IRS allows an unlimited transfer of assets between spouses upon the death of a spouse
free of estate tax.

However, an individual is limited to a $2,000,000.00, estate tax exemption to any person or
persons who are not that person’s spouse.

For a couple with assets in excess of $2,000,000.00, a marital deduction trust can preserve the
personal estate tax exemption of both persons, for a potential estate tax savings of $900,000.00.

For couples with assets in excess of $4,000,000.00, an additional tax savings of $730,000.00
can be realized by judicious use of the gift tax exclusion.
Philip McCarthy
Attorney at Law
A Marital Deduction Trust allows a
married couple to avoid Estate Taxes on
an estate of up to $4,000,000.00.
ESTATE TAX CONSEQUENCES FOR A MARRIED COUPLE
WITH ASSETS IN EXCESS OF $2,000,000.00
LONG ANSWER

CONSEQUENCE OF IMPROPER ESTATE PLANNING

Suppose that John and Mary, a married couple, have an estate worth $3,000,000.00.  

Upon John’s death, without proper estate planning, John’s one half of the estate worth
$1,500,000.00, could pass to Mary, or to his heirs and beneficiaries free of any estate tax.  

Assuming that John leaves everything to Mary, Mary’s estate at that point would be
$3,000,000.00.  

If Mary were to die soon after John, she could pass $2,000,000.00, to her heirs and
beneficiaries free of any estate tax.  However, $1,000,000.00, of her estate would be exposed
to estate tax.    

Mary’s estate tax on her estate would be $450,000.00.

THE BENEFIT OF PROPER ESTATE PLANNING

Suppose that John and Mary, a married couple, have an estate worth $3,000,000.00.  

Upon John’s death, by utilizing a marital deduction trust, Mary would pour $2,000,000.00, of
estate assets into John’s decedent’s trust, and would hold $1,000,000.00, in her own survivor’s
trust.

Upon Mary’s death whatever amount that remains in John’s decedent’s trust would pass to his
heirs and beneficiaries free of any estate tax thanks to his preserved personal estate tax
exclusion.  

Likewise, whatever amount under $2,000,000.00, that remains in Mary’s survivor’s trust
would pass to her heirs and beneficiaries free of any estate tax.  

By utilizing the marital deduction trust John and Mary would preserve the $450,000.00, that
otherwise would have gone to pay estate taxes for their heirs and beneficiaries.
For a more detailed analysis of
the tax advantage of utilizing the
Marital Deduction Trust and/or the Gift Tax Exclusion
contact me.
For a more detailed analysis of
the tax advantage of utilizing the
Marital Deduction Trust and/or the Gift Tax Exclusion
contact me.