Qualified domestic trust

(redirected from QDOT)
Also found in: Dictionary, Medical, Acronyms, Encyclopedia.

Qualified Domestic Trust

A trust into which the trustor deposits funds and other assets to provide for a surviving, non-U.S. citizen spouse while also maintaining control of what happens to those assets after the surviving spouse dies. In a Q-DOT, the trustor names his/her surviving spouse as beneficiary and provides that income and/or principal from the trust shall pass to that spouse upon the trustor's death. This enables the surviving spouse to avoid estate taxes to which the non-American spouse would otherwise be subject. See also: Q-TIP.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Qualified domestic trust (QDOT).

If your spouse isn't a US citizen and your estate is large enough to risk being vulnerable to estate taxes, you can use a qualified domestic trust (QDOT) to allow your spouse to enjoy the benefit of the marital deduction until his or her own death.

In short, the marital deduction means that one spouse can leave the other all his or her assets free of estate tax. The inherited assets become part of the estate of the surviving spouse, and unless the combined value is less than the exempt amount, estate tax could be due at the death of that spouse.

The difference, with a QDOT, is that at the death of the surviving, noncitizen spouse, the assets in the trust don't become part of his or her estate, but are taxed as if they were still part of the estate of the first spouse to die. Income distributions from the trust are subject to income tax alone, but distributions of principal may be subject to estate tax.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
This would diminish the need to fund a QDOT in order to provide support for the surviving noncitizen spouse.
For a trust to be a QDOT, it must meet the following requirements:
Question--What are the requirements of a qualified domestic trust (QDOT)?
* Examples are provided of how proper planning for the use of a QDOT in conjunction with portability can maximize the amount that a couple pass on to their heirs.
Third, the decedent's executor must elect treatment as a QDOT. Assuming all the other requirements are satisfied, this election can be made on the decedent's federal estate tax return.
An appropriately drafted living trust can include a credit shelter (bypass, unified credit) trust, a multigenerational or generation-skipping trust, a marital deduction (QTIP or QDOT) trust, various trusts for minors, supplemental or special needs trusts, or charitable remainder trusts.
He also unveiled new ambassadors of the Olokun Festival, which include ' Bashiru Adisa (Baba Gboin), Tokunbo Aderinokun Babs Olurinde, Abbey Fagboro, Mrs Yemi Ajide- Layinka Fakoya Qudus, (QDot).
The temporary regulations also address the application of the portability rules when the decedent's assets are transferred to a qualified domestic trust (QDOT) for the benefit of a surviving spouse who is not a U.S.
A QDOT allows a marital deduction and defers the estate tax on the first spouse's death while assuring that the estate tax will eventually be collected when either subsequent distributions of principal are made or when the second spouse dies.
* reform a qualified domestic trust (QDOT) for a noncitizen spouse under IRC section 2056(d) and IRC section 2056A(a); or
The exception to this rule allows a marital deduction for property passing to the surviving spouse in a qualified domestic trust (QDOT).