Homer and Laura are husband and wife. At the time of Homer's death, 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). Homer owns an insurance policy on his life (maturity value of $1,000,000) with Laura 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 is allowed for the value of property passing from the decedent to the surviving spouse. In this case, the property passing to Laura includes the land held as tenants by the entirety (which is not included in Homer's estate), the stock held as tenants in common (which is included in Homer's estate), and the insurance policy proceeds (which are also included in Homer's estate). The value of the land is $2,000,000, the value of the stock is $3,000,000, and the value of the insurance policy proceeds is $1,000,000. Therefore, the total value of the property passing to Laura is $6,000,000. The marital deduction is limited to the value of the property passing to the surviving spouse, so the marital deduction allowed Homer's estate is $3,500,000.

Homer and Laura Are Husband and Wife