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 Illinois, 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 is significant because it helps to minimize the estate tax burden on the surviving spouse. The value of the assets transferred to the surviving spouse is deducted from the total value of the deceased spouse's gross estate when calculating the estate tax. This deduction applies to transfers made both during life and at death, as specified in the deceased spouse's will. It's important to note that while the federal estate tax exemption amount is quite high, Illinois has its own estate tax with different exemption levels, which may affect estates that are not subject to federal estate taxes. Therefore, it's advisable for spouses in Illinois to consult with an attorney to understand how the marital deduction and other estate planning strategies can be optimized under both state and federal tax laws.