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 York, 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, whether the transfer occurs during life or at death through a will. This deduction effectively defers estate taxes on the transferred assets until the death of the second spouse. To qualify for the marital deduction in New York, the recipient spouse must be a U.S. citizen, and the assets must be transferred outright or through certain types of trusts, such as a Qualified Terminable Interest Property (QTIP) trust. It's important to note that while the marital deduction can eliminate estate taxes at the first spouse's death, the surviving spouse's estate may be subject to estate taxes upon their subsequent death if the combined value of their estate exceeds the New York estate tax exemption threshold, which is subject to change through legislation.