Spouse dies in 1978.Marital deduction passes assets to other spouse.She dies in '06.What exemption applies?

Question

New estate tax laws provide increased exemptions. How does this work with the use of the marital deduction trust prior to implementation of new tax laws in 2001?

Answer 1

If she remarried before she died, the new spouse can receive his part of her estate tax free.

I assume you mean, though, the portion she received from her dead husband. This is not considered "spousal exemption." The first $2 million given after considering charitable gifts are exempt.

Answer 2

2 million if she is remarried can go to the bypass trust. If not, a lifetime 1 mllion exemption is allowed to someone other than the spouse.