A qualified domestic interest trust is a living trust that contains specific language permitting a marital deduction for property passing to a non citizen spouse. This unlimited estate tax marital deduction is not available for transfers to a non-citizen spouse unless the spouse who survives is a U.S. resident on the date of a spouse’s death. The surviving spouse must also remain a resident at all times following death and becomes a citizen of the U.S. before the federal estate tax return is made.

To be a Q-Dot trust, at least one named trustee must have U.S. citizenship or be a domestic corporation (“U.S. Trustee”). Other than income distributions, no distribution comes from the trust unless the trustee chooses to withhold the Q-Dot tax from the distribution of funds. Use a Q-Dot as a part of a living trust to:

1. Give the trustee power to reform the trust to comply with Q-Dot trust requirements.

2. Grant the trustee authority to terminate the Q-Dot.

3. Preserve the marital deduction for property transferred directly to the non citizen-surviving spouse by having the non-citizen spouse transfer timely or irrevocably assign the property to a Q-Dot trust.

4. Maximize the non-citizen spouse’s exclusion amount during life by gifting assets from the other spouse.

Action Steps
The best contacts and resources to help you get it done

Find Q-Dot trust advice from specialists in living trusts with a Q-Dot component

The size of the taxable estate determines the implications and administration of the Q-Dot. An attorney specializing in both trust and estate work and tax law is well versed in both the structure of different types of trusts and their time lines under the tax code.

I recommend: Most trust attorneys, estate planning attorneys or tax attorneys use Q-Dot trusts when necessary for tax purposes and in certain situations. Type in "Trusts and Estates" or "Tax Law" in the keyword box on Findlaw.com to find an attorney in your area. Use the Martindale.com lawyer locator option and click on "Trusts and Estates" or "Tax" in the "Areas of Practice" section for lawyers who specialize in trust work.

Create Q-Dot trust documents with online tools and resources

Living trusts are relatively easy to produce with the right online tools, forms and Q-Dot trust information. Do it yourself trusts are also a great resource when time is an issue and a trip to the attorney's office isn't possible.

I recommend: Both Legalzoom.com and Do It Yourself Documents have "for fee" living trust kits, forms and advice for those individuals wishing to put Q-Dot trust documents together themselves.

Work with a Q-Dot trust expert for Q-Dot Trust management

A living trust with a Q-Dot trust cuts down on administrative costs by putting the surviving trustees in charge of handling the estate. Use trusted experts in living trust work and Q-Dot trusts for the most comprehensive plans for management available.

I recommend: Andrew Kurth has offices throughout the United States and the global community specializes in both trust and estate work and tax law. Adorno & Yoss has over 280 attorneys nationwide and provides a full range of legal services to both corporations and individuals.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  A QDot Trust may be a part of a revocable living trust as long as it has the right modifications to satisfy the requirements for a Q-Dot.