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 Pennsylvania, the concept of the estate tax marital deduction is primarily relevant at the federal level, as Pennsylvania does not impose a state estate tax. The federal estate tax marital deduction allows a married spouse to transfer an unlimited amount of assets to their surviving spouse without incurring federal estate taxes. This deduction is significant for estate planning purposes, as it can effectively defer the estate tax until the death of the second spouse. The value of the assets transferred to the surviving spouse is deducted from the decedent's gross estate, reducing the taxable estate. It's important to note that while Pennsylvania does not have an estate tax, it does impose an inheritance tax on the transfer of assets to beneficiaries, but transfers between spouses are generally exempt from this tax. To ensure proper application of these rules and to navigate the complexities of estate planning, it is advisable to consult with an attorney who specializes in this area of law.