A marital life estate is, in the common law tradition of the United States and Great Britain, a life estate held by the spouse (husband or wife) or widowed spouse, for the duration of that spouse's life.
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Creation
The marital life estate may be created by operation of law, agreement, contract, will, deed, or court order, such as a divorce decree or judgment.
Tax avoidance
This may be created as a tax avoidance tool, and in such cases is called an AB trust, a credit shelter trust, or a bypass trust. In such situations, each spouse gives all of their property in trust to his wife and her husband, for life, with a remainder to children or grandchildren. This can be a living trust, also called an inter vivos trust, in combination with a marital life estate. Any person considering this estate planning vehicle should consult a trained professional, such as attorney.
The estate tax can be a major consideration for starting such a device. This is not currently an urgent issue, because of the temporary phase-out of the Federal estate tax in 2010. However, in 2011, the estate tax will revert to its previous tax rates.