A more thorough explanation:

Marital deduction is a tax benefit that allows spouses to transfer property to each other without incurring gift or estate taxes. This deduction is available for almost all types of property and there is no limit to the amount that can be transferred.

However, the deduction does not eliminate taxes completely. The spouse who receives the property will have to pay estate taxes when they pass away. This deduction is particularly important for wealthy couples who want to avoid estate taxes by using both spouses' applicable exclusion amounts.

There are some limits to the marital deduction for tax purposes. For example, terminable property typically does not qualify for the deduction unless it meets certain exceptions, such as for QTIP trusts or charitable remainder trusts. Additionally, transfers must be made to a legally recognized spouse and for estate marital deductions, the benefiting spouse must survive the granting spouse. Transfers made to non-U.S. citizen spouses may also require a qualified domestic trust.

Example: John and Jane are a married couple with a combined net worth of $20 million. If John were to pass away and leave all of his assets to Jane, she would not have to pay any estate taxes thanks to the marital deduction. However, when Jane passes away, her estate will be subject to estate taxes on the full $20 million.

Example: Sarah and Tom are also a married couple, but Tom is not a U.S. citizen. In order to qualify for the marital deduction, Sarah would need to set up a qualified domestic trust to hold the assets she wants to transfer to Tom. This trust would ensure that the assets are subject to U.S. estate taxes when Tom passes away.