Qualifying Domestic Trust (QDOT)

Qualifying Domestic Trust (QDOT)

What is ‘Qualifying Domestic Trust – QDOT’

A type of trust that allows taxpayers who are not U.S. citizens to claim the marital deduction for estate-tax purposes. Spouses without citizenship are not eligible for the marital deduction without a qualifying domestic trust. QDOTs are similar to QTIP trusts in that the marital deduction is conditional upon the inclusion of assets inside the trust.

Explaining ‘Qualifying Domestic Trust – QDOT’

Although establishing a QDOT is often easier and faster than applying for citizenship, this type of trust is not without risk. There are numerous provisions pertaining to this type of trust that must be obeyed carefully in order for the trust to remain valid. QDOTs apply only to spouses of decedents who died after November 10, 1988. At least one trustee must be either a U.S. citizen or domestic corporation that is authorized to retain estate tax out of the trust assets.

Further Reading

  • The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses. – search.ebscohost.com [PDF]
  • Planning Guide for Noncitizens – link.springer.com [PDF]
  • The Inequity of US Estate Tax Consequences for Noncitizen Spouses and Expatriates and the Impact of the Proposed Exit Tax – meridian.allenpress.com [PDF]
  • The Economic Growth and Tax Relief Reconciliation Act of 2001: Title V – heinonline.org [PDF]
  • Setting Servicemembers up for More Success: Building and Transferring Wealth in a Challenging Economic Environment-A Tax and Estate Planning Analysis – heinonline.org [PDF]
  • Opt mal Marital Trust Planning for Non-US Citizen Surviving Spouses – heinonline.org [PDF]
  • Transfer Taxes: 5 Questions to Ask Clients with International Ties; Increasing Globalization Raises New Issues for CPAs to Consider When Advising Families … – www.questia.com [PDF]
  • Section Officer and Council Nominations – heinonline.org [PDF]
  • North America: The new financial planning frontier – search.proquest.com [PDF]
  • Estate and asset protection for the resident alien: A case study (part II) – search.proquest.com [PDF]