The estate tax marital deduction—also known as the unlimited marital deduction or the marital deduction—allows one married spouse to transfer an unlimited amount of assets to the other spouse without incurring estate taxes on those assets. The marital deduction is calculated by subtracting the value of the assets passed on or transferred to the other spouse from the total value of the transferring spouse’s gross estate.
A transfer that qualifies for the marital deduction may be made while both spouses are alive or after the death of a spouse, as provided in the deceased spouse’s will.
In Florida, as in all states, the estate tax marital deduction is governed by federal law, as Florida does not impose a state-level estate tax. The federal marital deduction allows a married individual to transfer an unlimited amount of assets to their spouse without incurring federal estate taxes. This can be done either during their lifetime or upon death through a will or trust. The value of the assets transferred to the surviving spouse is deducted from the decedent's gross estate, potentially reducing the estate tax liability to zero. However, it's important to note that the surviving spouse may be subject to estate taxes upon their death if their estate exceeds the federal estate tax exemption amount. As of the knowledge cutoff in 2023, the federal estate tax exemption is significantly high, meaning that many estates will not owe federal estate tax even without relying on the marital deduction. It is advisable for individuals to consult with an attorney to understand how the marital deduction and other estate planning strategies can be utilized in their specific circumstances.
