In the current year, Melanie makes two transfers to Peter, her husband. In June, she gives him land valued at $50,000. In December, she transfers $500,000 to a trust with a bank named as trustee. All income must be paid to Peter monthly for life. At Peter's death, the property passes to their children. Compute the maximum marital deduction assuming Melanie makes the appropriate elections.

Question

Quizplus · Accepted Answer

The maximum marital deduction includes the value of the land ($50,000) and the value of the trust ($500,000) since both transfers qualify for the marital deduction. Therefore, the total is $550,000. However, the trust qualifies for the marital deduction only if a QTIP election is made, allowing the deduction of $500,000. Thus, the total deduction is $535,000.

In the Current Year, Melanie Makes Two Transfers to Peter