The adjusted gross estate may be reduced by (1) a marital deduction, and (2) a charitable deduction to arrive at the taxable estate.
Marital Deductions
A marital deduction is allowed for property that (1) is included in the decedent's gross estate, and (2) passes at the decedent's death to a surviving spouse, (3) in a qualifying manner (in a manner that gives the surviving spouse control and enjoyment essentially tantamount to outright ownership, or that meets the requirements of qualified terminable interest [QTIP] property).
The maximum amount allowable as a marital deduction for federal estate tax purposes is the net value of the property passing to the surviving spouse in a qualifying manner. Otherwise, there is no limit to the marital deduction. An individual could conceivably transfer his or her entire estate to the surviving spouse without incurring any federal estate tax.
Charitable Deductions
A charitable deduction is allowed for the fair market value of any type of gift to a qualified charity at a decedent's death. The deduction is limited to the net value of the property included in the gross estate that is transferred to the charity. In other words, a decedent could conceivably leave his or her entire estate to charity and receive a deduction for the entire amount.
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