A QDOT is used when a US Citizen is married to a non-US Citizen. The Qualified Domestic Trust is designed to hold all or some of the US Citizen’s wealth to avoid or delay the Federal Estate Tax.
Because Congress is worried that a non-US Citizen spouse will attempt to move assets overseas to avoid the Federal Estate Tax, a non-US Citizen spouse is not given an unlimited spousal exemption. This means the US Citizen Spouse’s death a tax might be due. Congress did spell out how the tax can be avoided or delayed, and a QDOT adopts those terms.
Here are some questions clients, beneficiaries, and Trustees ask
A QDOT is not necessary, but without a QDOT your estate may pay Estate Tax at an accelerated rate. The QDOT is designed to defer the tax.
Yes, a QDOT is a tool that can be used if it is the right fit. Other trusts might be a better fit. An examination of your assets and an understanding of your particular goals I can advise you about the pros and cons of various trusts.
If your estate exceeds the Federal Estate Tax Exemption, then a tax is due at your death. A QDOT can help delay, or even avoid, the tax.
A QDOT is an excellent tool, but other instruments such as an ILIT may also help. The best plan will depend on your particular assets and your goals.
The best plan will depend on your unique goals and particular assets. Many tools are available, including the QDOT. Only a review of your goals and assets can determine the best plan.
If you have any questions about Qualified Domestic Trusts or any other estate planning topics, please contact us to schedule a free consultation. For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain complex estate law and planning techniques clearly and concisely. We make it easy for you to understand QDOTs so you can make the best decisions for yourself and your family.