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 Indiana, as in all states, the estate tax marital deduction is primarily governed by federal law, not state law. The federal estate tax marital deduction allows a married individual to transfer an unlimited amount of assets to their spouse without incurring any federal estate taxes, whether the transfer occurs during their lifetime or at death through a will. This means that the value of the assets passed to the surviving spouse is deducted from the decedent's gross estate, potentially reducing the estate tax liability to zero. It's important to note that Indiana does not impose a state-level estate tax, so there are no additional state statutes that would affect the marital deduction in Indiana. The marital deduction is a significant estate planning tool for married couples, allowing them to defer estate taxes until the death of the second spouse. However, proper legal documentation and adherence to IRS regulations are necessary to ensure that transfers qualify for the deduction.