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 Minnesota, the estate tax marital deduction aligns with federal law, allowing a surviving spouse to inherit an unlimited amount of assets from their deceased spouse without incurring estate taxes. This deduction applies to assets transferred at death as outlined in the deceased spouse's will or through other estate planning instruments. The value of the assets transferred to the surviving spouse is deducted from the gross estate of the deceased, potentially reducing the taxable estate. It's important to note that while the federal estate tax exemption is quite high, Minnesota's estate tax exemption is lower, meaning estates that are not subject to federal estate taxes might still owe state estate taxes. However, the marital deduction can help minimize or eliminate Minnesota estate taxes on assets passed to the surviving spouse. Estate planning with an attorney is advisable to navigate the specifics of Minnesota's estate tax laws and to ensure the marital deduction is properly utilized.