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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]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

Planning Guide for NoncitizensPlanning Guide for Noncitizens
link.springer.com [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

The Inequity of US Estate Tax Consequences for Noncitizen Spouses and Expatriates and the Impact of the Proposed Exit TaxThe Inequity of US Estate Tax Consequences for Noncitizen Spouses and Expatriates and the Impact of the Proposed Exit Tax
meridian.allenpress.com [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

The Economic Growth and Tax Relief Reconciliation Act of 2001: Title VThe Economic Growth and Tax Relief Reconciliation Act of 2001: Title V
heinonline.org [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

Setting Servicemembers up for More Success: Building and Transferring Wealth in a Challenging Economic Environment-A Tax and Estate Planning AnalysisSetting Servicemembers up for More Success: Building and Transferring Wealth in a Challenging Economic Environment-A Tax and Estate Planning Analysis
heinonline.org [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

Opt mal Marital Trust Planning for Non-US Citizen Surviving SpousesOpt mal Marital Trust Planning for Non-US Citizen Surviving Spouses
heinonline.org [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

Transfer Taxes: 5 Questions to Ask Clients with International Ties; Increasing Globalization Raises New Issues for CPAs to Consider When Advising Families …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]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

Section Officer and Council NominationsSection Officer and Council Nominations
heinonline.org [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

North America: The new financial planning frontierNorth America: The new financial planning frontier
search.proquest.com [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …

Estate and asset protection for the resident alien: A case study (part II)Estate and asset protection for the resident alien: A case study (part II)
search.proquest.com [PDF]
… the Internal Revenue Code outlines specific require- ments that must be met in qualifying a QDOT … an estate attorney as soon as possible to ensure tbe election to qualify tbe QDOT can … The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-US Citizen Spouses …



Q&A About Qualifying Domestic Trust (QDOT)


Do I need a qdot?

It is necessary to know the client's citizenship and status to accurately plan and determine if any estate tax treaties apply. If the surviving non-citizen spouse becomes a citizen before the filing of the estate tax return, there will be no need for a QDOT.

Can a non US citizen create a trust?

Naming a non-US citizen as a trustee may cause the trust to be considered a foreign trust. The designation of a foreign trust can increase income tax liability and income tax exposure for the trust.

What is a Qdt?

Qualified Domestic Trust (known as a QDT or QDOT) preserves the marital deduction when the surviving spouse is not a United States citizen and whose assets are likely to be subject to the federal estate tax if the marital deduction is not available.

What type of trust qualifies for a marital deduction?

Qualified Terminable Interest Property (QTIP) Trust qualifies for the marital deduction. In a QTIP trust, the surviving spouse must receive all income generated by the trust property for life, paid at least annually.

What qualifies for the unlimited marital deduction?

The unlimited marital deduction applies only to surviving spouses that are United States citizens. A qualified domestic trust (or QDOT) may be obtained to provide unlimited marital deductions for non-qualified spouses. Income on the principal distributed to the surviving spouse is taxed as individual income.

Does portability apply to non citizens?

Portability does not apply if the surviving noncitizen spouse is also a nonresident alien.

Can a non US citizen inherit?

Yes, noncitizens can inherit property just as citizens can.