Sally's will passes real estate to Otto (her surviving husband). The real estate is worth $800,000 but is subject to a mortgage of $200,000. The transfer provides Sally's estate with a marital deduction of $600,000.

Question

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The marital deduction is the value of the property passing to the surviving spouse and is equal to $800,000 (the value of the real estate) minus the mortgage of $200,000, which equals $600,000. This means that the $600,000 is deducted from the gross estate when calculating the estate tax.

Sally's Will Passes Real Estate to Otto (Her Surviving Husband)