What is a QDOT?

A QDOT, or Qualified Domestic Trust, is specifically designed to benefit a noncitizen spouse upon the death of the other spouse. The primary purpose of a QDOT is to allow assets to pass to the noncitizen spouse without incurring significant estate taxes at the time of the decedent spouse's death. Since the unlimited marital deduction does not apply to noncitizen spouses, a QDOT allows for the deferral of estate taxes until the noncitizen spouse receives the assets or the property is transferred to other beneficiaries.

Funds placed in a QDOT are subject to certain requirements, such as the necessity to have a U.S. trustee and the trust must have provisions to ensure that the estate tax obligations are met. This makes the QDOT a valuable estate planning tool for couples where one spouse is a noncitizen, allowing them to maintain the maximum benefit of estate tax deferrals while providing for the surviving spouse.

In contrast, other options such as special-use valuation for real estate, a type of estate tax return, and a living trust for all spouses do not have the specific advantages or features that a QDOT offers concerning estate taxes for noncitizen spouses.