Estate Planning
Optimizing Use of Unified Credit and Marital Deduction
[2006 - 2008]
The martial deduction is the cornerstone of estate planning for married couples. However, if a couple's aggregate assets exceed $2,000,000, it is possible to over utilize the marital deduction causing unnecessary estate tax liability. By leaving too much of your property to your surviving spouse, you may increase the potential gross estate of the surviving spouse above the $2,000,000 level sheltered by the unified credit. This will cause an estate tax on the spouse's death, which can be easily avoided.
It is important to remember that if all your property passes to your surviving spouse, your taxable estate and estate tax liability will be zero, but you will utilize none of your unified credit. After death there is no way to recover the benefit of the decedent's unified credit. You must "use it, or lose it".