Which of the following is typical of a marital deduction trust?

• A. Income is distributed at the trustee's discretion.
• B. The grantor's children can exercise a power of appointment over principal.
• C. The surviving spouse has the unrestricted right to receive income.
• D. The surviving spouse is not entitled to any income.

Answer: (C)

A marital deduction trust is set up so that the surviving spouse has an income interest in the trust, typically for life. This guaranteed right to income is what allows the trust to qualify for the unlimited marital deduction, meaning the first spouse’s death can transfer assets to the surviving spouse without estate tax at that time. In practice, this often means the surviving spouse is entitled to all the trust’s income for life, with the remainder passing to other beneficiaries later.

So, the statement that the surviving spouse has the unrestricted right to receive income fits this structure perfectly: it reflects that non-discretionary, lifetime income entitlement that characterizes marital deduction arrangements.

If income were discretionary, or if the spouse had no right to income, or if other family members held broad powers over principal, the arrangement wouldn’t align with how a typical marital deduction trust is designed to function for tax purposes.