If you or your spouse isn’t a U.S. citizen and your estate is larger than the current $15 million estate tax exemption (or could appreciate in value to exceed it), you might want to consider a qualified domestic trust (QDOT). Married couples who are both citizens can take advantage of the marital deduction, which defers any estate tax until the second spouse dies. Assets transferred to a QDOT to benefit a noncitizen spouse receive similar treatment and are temporarily protected from estate tax. The spouse can withdraw income from the trust estate-tax-free, but distributions of principal generally are subject to estate tax. Some QDOT rules have recently changed, so contact us with questions.
