Marital Trust

If it’s true that the only certain things in life are death and taxes, then we shouldn’t be surprised that our stuff is taxed even after we die. That’s right: whatever we leave to our heirs, they’re gonna have to pay taxes on it. Unless, that is, our heir is our spouse and we’ve set up a marital trust.

A “marital trust” is a special kind of trust that allows our surviving spouse to go ahead and not pay estate taxes on what we leave them. Married folk are supposed to be able to pass assets and wealth back and forth without incurring a tax penalty; marital trusts allow this to continue even after one spouse dies.

Now, when the second spouse dies, all bets are off. Whoever inherits the trust at that point—it’s usually kids or other relatives, though we have heard tales of trusts being left to family pets, which is sweet but a little weird—is going to have to pay estate taxes on whatever’s left. There are several kinds of marital trusts, and there are also trusts designed to help minimize the tax impact on non-spouse heirs, so we should definitely consult someone if we’re looking to set up a trust of our own.