The Benefits of Qualified Domestic Trusts in Estate Tax Planning for Non-U.S. Citizen Spouses.

Rawson, Deborah L.

Under Internal Revenue Code 2056A, a non-U.S. citizen spouse can gain substantial benefit from the continued deferral of estate taxes on assets received from a deceased spouse. For assets that are in excess of the estate tax exclusion, this can be accomplished through the use of a qualified domestic trust (QDOT), provided that certain rules are followed. In addition to reviewing the strict and very unique aspects of administering a QDOT this article will also examine the complex tax calculations that are required not only during the administration of the trust, but also at the time of termination. In light of the changing estate tax laws, fewer individuals may utilize this estate planning tool than has historically been the case. With that being said, although many will no longer require the use of a QDOT, those still making use of this valuable tool will want to be well versed in the strict requirements that must be met with the administration of such a trust.

QUALIFIED domestic relations orders; TRUSTS & trustees; SPOUSES; INHERITANCE & succession; ESTATE planning; INHERITANCE & transfer tax; DEFERRED tax; FINANCE

Journal of Financial Service Professionals, 2009, Vol 63, Issue 6, p50

1537-1816

Academic Journal