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 Hawaii, the estate tax marital deduction aligns with federal law, allowing a married spouse to transfer an unlimited amount of assets to their surviving spouse without incurring estate taxes. This deduction applies to both inter vivos transfers (those made while both spouses are alive) and transfers made upon the death of a spouse, typically through provisions in the deceased spouse's will. The value of the assets transferred to the surviving spouse is deducted from the gross estate of the deceased, potentially reducing the estate tax liability. It's important to note that Hawaii has its own estate tax in addition to the federal estate tax, but the state also recognizes the marital deduction, which can significantly reduce or eliminate the state estate tax for married couples. To ensure proper application of the marital deduction and compliance with both state and federal tax laws, it is advisable to consult with an attorney who specializes in estate planning.