Homer and Laura are husband and wife.At the time of Homer's prior death in 2012,they owned the following: land as tenants by the entirety worth $2,000,000 (purchased by Homer)and stock as equal tenants in common worth $3,000,000 (purchased by Laura).Laura also owns an insurance policy on Homer's life (maturity value of $1,000,000)with herself as the designated beneficiary.Homer's will passes all his property to Laura.How much marital deduction is allowed Homer's estate?

Question

Quizplus · Accepted Answer

The marital deduction allows an unlimited amount of assets to pass from one spouse to another without being subject to estate tax. In this case, the value of the assets owned jointly as tenants by the entirety ($2,000,000) is eligible for the marital deduction. Additionally, since Homer's will passes all his property to Laura, the value of the stock held as tenants in common ($3,000,000) is also eligible for the marital deduction, bringing the total amount to $5,000,000. However, the insurance policy on Homer's life is not eligible for the marital deduction since Laura is the designated beneficiary. Therefore, the correct answer is $2,000,000 + $3,000,000 = $5,000,000, which is choice B.

Homer and Laura Are Husband and Wife