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 Colorado, as in all states across the United States, the estate tax marital deduction is a provision under federal law that allows a married individual to transfer an unlimited amount of assets to their spouse without incurring federal estate taxes. This deduction applies to transfers made both during life and at death. Colorado does not impose a state-level estate tax, so the federal rules for the marital deduction are the primary concern for Colorado residents. The marital deduction effectively defers estate taxes on the transferred assets until the death of the second spouse, as the assets included in the marital deduction are then included in the surviving spouse's estate for estate tax purposes. It's important to note that to qualify for the marital deduction, the recipient spouse must be a U.S. citizen, and the assets must be transferred outright or through certain types of trusts. Estate planning with an attorney can help ensure that transfers are structured to qualify for the marital deduction and to address any other potential tax implications.