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).
The Virgin Islands Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust is a type of trust established in the Virgin Islands jurisdiction that offers significant benefits for married individuals in terms of estate planning and asset protection. This unique trust structure allows for the creation of a marital trust with lifetime income streams, while also granting the beneficiary spouse the power to appoint assets to a separate residuary trust. By setting up a Virgin Islands Marital Deduction Trust with Lifetime Income and Power of Appointment in Beneficiary Spouse and Residuary Trust, individuals can ensure the financial security of their spouse while maintaining control over the disposition of their assets after the beneficiary spouse passes away. Keywords: Virgin Islands, Marital Deduction Trust, Lifetime Income, Power of Appointment, Beneficiary Spouse, Residuary Trust, estate planning, asset protection, financial security, trust structure. Different types of this trust may include variations in specific terms and conditions, such as the duration and extent of the lifetime income stream, the scope of the power of appointment, and the allocation and distribution of assets in the residuary trust. It is essential to consult with a qualified attorney familiar with Virgin Islands law to determine the most suitable type of trust based on individual circumstances and objectives.
