QDOT

What is a QDOT?

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.

What is the Purpose of a QDOT?

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.

Typical Estate Questions About QDOTs:

Here are some questions clients, beneficiaries, and Trustees ask

Is the qualified domestic trust mandatory if my spouse is a non-US citizen?

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.

Can I create an ordinary trust if my spouse is a non-US citizen?

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.

Under what circumstances would my non-US citizen spouse have to pay the Federal Estate Tax?

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.

How can the Federal Estate Tax be Delayed for my Non-US Citizen Spouse?

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.

How can the Federal Estate Tax be Avoided for my Non-US Citizen Spouse?

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.

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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.

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Peter Klenk is the founding member of Klenk Law, a seven attorney boutique estate planning law firm. We serve clients in Pennsylvania, New Jersey, New York, Minnesota and Florida. Peter Klenk received his Masters in Taxation LL.M. from NYU Law School and his J.D. from the University of Minnesota Law School. He served his country in the Navy JAGC during Desert Storm. Easy to talk to, feel free to call Peter for an appointment. We will make the process as easy as possible!

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QDOT: Everything You Need to Know