QDOT – A viable property planning opportunity for non-citizens

Estate planning is important to maximize the gifts you leave to your recipients. However, if you are not a U.S. citizen or resident, be aware of the differences in the law when it comes to planning your stay. The differences can be unfavorable. Marriage allowance is also not allowed for a citizen or American resident. resident, where the beneficiary is a non-resident spouse. Fortunately, establishing a qualified domestic trust, QDOT, can be a viable opportunity to increase tax deductions.

When a QDOT is established, the estate is treated as the surviving spouse and is therefore passed through lower tax cuts. To qualify, a trust must name at least one U.S. citizen or domestic company as administrator. In addition, the trust must be structured so that there are appropriate provisions for collecting taxes through the U.S. Treasury. If the estate that passes to QDOT exceeds $ 2 million, one of the trustees must be a domestic corporation or a bond must be paid for 65% of the estate’s fair market value – to secure payment of tax. If the estate is under the $ 2 million mark, the law states that a maximum of 35% of the estate can be owned in the form of real estate located outside the U.S.

The rules are especially flexible in terms of the ability of someone other than the decedent to create a QDOT, like the surviving spouse, a surviving spouse’s representative or the executor of the estate. It is still best to deal with this type of drug as early as possible.

There are some drawbacks to establishing a QDOT that also needs to be weighed. Because the designated administrator will act as the withholding agent, he or she may be personally liable for the tax if they are not withheld or withheld. In addition, there may be some administrative burdens if the estate is handed over to a company administrator. For example, if the estate does not have liquid assets (those that cannot be easily taken out as cash, such as real estate), there may not be sufficient cash flow to pay trust fees (fees must be paid to administrators to manage the estate) or to to pay the bond fee if one was taken. In this case, assets may need to be sold to cover costs that may be difficult or undesirable. Because of the many advantages and disadvantages associated with QDOT, it is best to have an experienced professional evaluate your property and determine if a QDOT is the most economical way to set up your property.

Whether you choose to use a QDOT or plan your property in a different way, it is integrated that you look at your options with a lawyer who not only specializes in estate planning but is also knowledgeable about the nuances of working with non-residents in order to maximize the value of the estate you leave to your loved ones.