The object of a remainder purchase marital trust (RPM) is to create a transfer to a spouse who qualifies for a marital deduction under the gift tax, but which will not be in the spouse's taxable estate upon her death. Generally, a transfer to a spouse who qualifies for the gift tax marital deduction will be an absolute transfer. It totally belongs to the spouse and remains her taxable estate. If the transfer can be set aside from the spouse's estate then more assets can be moved to the children tax free, should you be survived by your spouse.

Ordinarily, the gift tax marital deduction is not available for life interests. It is a gift to the spouse for her lifetime and, after her death, it will go to someone else. There are exceptions for certain devices having the consequence of placing the assets in the spouse's taxable estate when she dies, such as a power of appointment. However, the disallowance of the marital deduction does not occur with a life interest should the users of the remaining interest pay full value for it.

The terms of the Remainder Purchase Marital trust are as follows:

· To the spouse for life and, upon her death,

· The remainder going to the children

This is the same scheme as in other trusts. However, the children do not receive a gift interest. They are required to pay the grantor for it by paying the full present value of the remaining interest. It should be noted that this would place the property back into the grantor's estate. The effect of this device is the transfer of any appreciation in value to the children free of estate tax.

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