Question

Joel and Rachel are both retired. Married for 50 years, they’ve amassed an estate worth $2.4 million. The couple has no trusts or other types of tax-sheltered assets. If Joel or Rachel dies in 2008, how much federal estate tax would the surviving spouse have to pay, assuming that the estate is taxed at the 45 percent rate? Joel and Rachel are giving all of their assets to their respective spouse upon their death. Ignore any tax consequences resulting from the death of the second spouse.

Answer 1

If Joe or Rachel dies in 2006-2008, there will be no federal estate tax liability since there is an unlimited marital deduction for the surviving spouse. Only when both die there will be an estate tax liability over the $2 million exemption amount.