Preserving Your Estate: Marital Deduction & Unified Credit Strategies

Preserving Your Estate: Marital Deduction & Unified Credit Strategies

Estate Preservation

Giving Rome its due – so to speak – in the form of taxes is a fundamental reality of inheriting property. As you prepare your estate, you should look for opportunities to preserve as much as it as possible for the people you love or the charities you support. Two strategies for preserving a legacy for its intended recipients are the marital deduction and the unified credit.

Marital Deduction

The marital deduction allows you to pass any or all of your assets to your surviving spouse at the time of your death, without paying federal estate tax. It is, perhaps, the simplest of estate preservation strategies for married couples.

However, the marital deduction doesn’t allow your family to avoid estate taxes completely. Unless your surviving spouse remarries, the assets your spouse inherited from – along with his or her own assets – will be subject to estate tax upon his or her death. As powerful as it is, the marital deduction alone simply defers tax responsibility for a time.

Unified Credit

Similar to estate gifting, the unified credit allows assets worth up to a certain amount to pass estate tax-free to your heirs. Although this credit is available to every estate, it’s often overlooked as a preservation strategy.

Also similar to estate gifts, the unified credit varies by year of death. The federal government provides resources for understanding, estimating, and filing estate taxes.

Other Strategies for Preserving Your Legacy

There are a few exceptions to the estate tax. For instance, in most cases, if your spouse or a federally-recognized charity will be inheriting assets from you, estate taxes don’t apply.

You can also employ a number of strategies – such as gifting or family partnerships  – to help decrease the amount by which your estate will be taxed.

However, rules vary by year of death and by certain other circumstances, so it’s wise to consult with an attorney or talk with other financial professionals to learn about which approaches to preserving your legacy for your loved ones apply to your situation.

Note: Provided content is for overview and informational purposes only. Neither the companies of OneAmerica nor their representatives provide tax, legal, fiduciary, or investment advice.

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