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 New Jersey, the estate tax marital deduction aligns with federal law, allowing a surviving spouse to inherit an unlimited amount of assets from the deceased spouse without incurring estate taxes. This deduction applies to assets transferred at death as outlined in the deceased spouse's will, as well as to qualifying transfers made during the lifetime of the spouses. It's important to note that New Jersey repealed its estate tax effective January 1, 2018, so there is no longer a state-level estate tax to consider for deaths occurring on or after that date. However, the federal estate tax still applies, and the marital deduction can be used to defer federal estate taxes until the death of the second spouse. To qualify for the marital deduction at the federal level, the surviving spouse must be a U.S. citizen, and the assets must be transferred outright or through certain types of trusts. It's advisable for individuals to consult with an attorney to ensure that their estate plan takes full advantage of the marital deduction and complies with all applicable laws.