What is the unlimited marital deduction?
The unlimited marital deduction allows one spouse to transfer any amount of property to the other spouse, during life or at death, free of federal gift and estate tax, provided the recipient spouse is a US citizen. It effectively defers estate tax until the death of the surviving spouse.
Does the marital deduction eliminate estate tax?
No, it defers it. Assets passing to the surviving spouse are removed from the first estate but are included in the survivor's estate. If the combined estate exceeds the survivor's available exemption at the second death, estate tax applies then. Bypass trusts and portability help manage this.
What is portability of the estate tax exemption?
Portability lets a surviving spouse add the deceased spouse's unused exemption (the DSUE amount) to their own. In 2025 each spouse has roughly $13.99M of exemption, so a couple can shelter close to $28M. Portability must be elected by filing a timely Form 706 estate tax return, even if no tax is due.
Does the marital deduction apply to a non-citizen spouse?
No. The unlimited marital deduction does not apply if the surviving spouse is not a US citizen. Instead, transfers must generally go through a Qualified Domestic Trust (QDOT) to defer estate tax, or use the annual exclusion for lifetime gifts to a non-citizen spouse.