Why would you need this type of Trust?
A Qualifying Domestic Trust (also known as a QDOT) is helpful if you have a non-citizen spouse. A non-citizen spouse does not qualify for the marital deduction if transferred outright.
What are the standards for a QDOT?
This is not an issue if you have a non-taxable estate, but with a taxable estate, it could be a problem. There are specific requirements for a QDOT:
- At least one trustee is a U.S. citizen or a domestic corporation.
- No distribution of corpus may be made from the trust unless the U.S. trustee has the right to withhold the estate tax imposed on the distribution.
- The executor must make an irrevocable election to have the trust treated as a QDOT.
- The trust must comply with regulations to ensure the collection of the estate tax imposed on taxable events.
This defers estate tax until the surviving spouse’s death (non-citizen). The QDOT allows for a transfer to spouse and children while still using the marital deduction.
Contact us today to schedule a consultation and learn more about how we can help you with your estate planning needs.