Any transfer of assets at death involves a variety of tax consequences, but estate planning for a married couple where one spouse is not a United States citizen involves unique taxation issues and planning. Couples who find themselves in this unique circumstance should consider the benefits of an estate plan that includes a Qualified Domestic Trust (QDOT).
In 2012, the federal estate tax provides a credit of $5,120,000, meaning that the first $5,120,000 of any estate not diminished by taxable lifetime gifts will pass free of the federal estate tax.¹ This exemption is scheduled to fall to $1,00,000.00 in 2013². Further, Section 2056 of the Internal Revenue Code contains the “marital deduction,” which provides that any property left to a surviving spouse following a decedent’s death is not taxed until the surviving spouse’s death. These provisions give married couples options for deferring estate tax payments until after the surviving spouse’s death.