3.4 Transfers Not Subject to Gift Tax

• Library: A Lawyer's Guide to Estate Planning: Fundamentals for the Legal Practitioner (ABA) (2018 Ed.)

3.4 Transfers Not Subject to Gift Tax

3.41 Marital Deduction

Under current law, a marital deduction is normally allowed for the full value of any property transferred from one spouse to another. The requirements for the gift tax marital deduction are generally the same as for the estate tax marital deduction. Basically, the property must be given outright to the donee-spouse, or if in trust, the donee-spouse must have the absolute right to income for life from the property coupled with a general power of appointment. Another option is that the gift meet the requirements to be treated as qualified terminable interest property. This option requires that the donee receive a lifetime income from the property without having to receive a general power of appointment. It also requires an irrevocable election on a timely filed gift tax return. If these requirements are met, the marital deduction is available for the entire interest given, and no gift tax is owed on the transfer.⁴²

Caution: A transfer...