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 Utah Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a specific type of trust established in the state of Utah. This trust allows an individual (the granter) to provide financial protection and benefits to their surviving spouse while also ensuring the preservation and distribution of assets to other designated beneficiaries. In this type of trust, the granter transfers assets to a trust, which is managed by a designated trustee. The surviving spouse is the primary beneficiary of the trust and is entitled to receive regular income payments for the duration of their lifetime. This lifetime income serves to support the surviving spouse and cover their various financial needs. Furthermore, the surviving spouse also holds the "Power of Appointment" within the trust. This means that they have the authority to determine how the trust's assets will be distributed upon their death. They can appoint beneficiaries, either from a pre-determined list or at their discretion, who will receive the remaining assets from the trust. Additionally, there is another component known as the "Residuary Trust." This part of the trust ensures that any leftover assets or funds are properly managed and distributed according to the granter's wishes after the surviving spouse passes away. The residuary trust typically designates beneficiaries who will receive these remaining assets. While the Utah Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust may have variations in terms of specific provisions and legal language, the fundamental purpose remains the same. It aims to provide financial security to the surviving spouse during their lifetime and facilitates the distribution of assets to other beneficiaries after both the granter and surviving spouse have passed away. Overall, this type of trust offers a comprehensive estate planning solution for individuals residing in Utah who want to ensure their spouse's financial well-being while also properly managing the distribution of their remaining assets. By naming a trust professional or attorney, granters can create a personalized plan that aligns with their unique circumstances and goals.
