IRC Section 2523 provides the federal gift tax marital deduction, allowing a donor to make qualifying lifetime transfers to a spouse without incurring immediate gift tax. When the donee spouse is a United States citizen and the transfer meets statutory requirements, the value of property transferred is generally deductible for gift tax purposes, effectively deferring transfer tax until later gifts or the spouse's death. Section 2523 operates as the lifetime counterpart to the estate tax marital deduction under IRC Section 2056. In life insurance and annuity planning, Section 2523 shapes decisions about whether a policy or contract should be owned jointly, transferred to a spouse, or used to fund marital or spousal trusts. While the marital deduction can eliminate current gift tax on transfers between spouses, it does not remove property from the transfer tax system, so planners must coordinate marital deduction usage with bypass trust strategies and future estate tax exposure at the surviving spouse's death.

In real world planning, advisors rely on IRC Section 2523 when clients wish to shift assets to a spouse for financial security, creditor protection, or simplicity of ownership. A policyowner might transfer an individual life policy to a spouse, using the marital deduction to avoid current gift tax, while understanding that the death benefits may be taxed in the spouse's estate later under IRC Section 2042. High net worth couples may combine marital deduction transfers with spousal lifetime access trusts, credit shelter trusts, and portability of the deceased spouse's unused exclusion to balance flexibility and tax efficiency. Advisors explain how Section 2523 interacts with ILIT planning, joint ownership, and beneficiary designations so couples do not mistakenly assume that marital deduction gifts make estate tax issues disappear. Properly used, the Section 2523 marital deduction allows spouses to support each other and reorganize ownership in a tax efficient way while preserving options for future estate planning adjustments.