QUALIFIED DOMESTIC TRUST If you, a U.S. citizen, marry a non-citizen, the federal government taxes your estate as soon as you pass, leaving your spouse with a lot less to live on. One of the ways to provide for your non-citizen spouse is to set up a qualified domestic trust or QDOT instead of a regular trust. When the time comes to write your will, you have the right and the ability, as a U.S. citizen, to leave your spouse your entire estate upon your death. If your estate is worth more than a certain amount, you can leave your assets in a trust, where they won’t be taxed, at least not until your spouse passes. With your assets in a trust, your spouse is entitled to any income the trust generates, typically interest payments. Setting up a Qualified Domestic Trust (QDOT) is a complicated business. The tax accounting experts such as Miller & Company LLP, NY Certified Public Accountants can set up a domestic trust for you so that you can be sure your loved ones are properly cared for in the event of your passing. We are a Miller & Company, the best rated NYC CPA firm. Most forward-thinking accountant NYC Paul Miller as well as most of the New York CPAs recommend that your spouse also have access to the assets in your trust. If any assets are withdrawn, though, they’re subject to estate taxes. Your personal accountant can explain the details of the law to you. WHAT IS A QUALIFIED DOMESTIC TRUST? If you, a U.S. citizen, marry a non-citizen, the federal government taxes your estate as soon as you pass, leaving your spouse with a lot less to live on. One of the ways to provide for your non-citizen spouse is to set up a qualified domestic trust or QDOT instead of a regular trust. What the government is trying to prevent by taxing your estate right away is your non-citizen spouse taking the money from the domestic trust out of the country without paying taxes on it. A QDOT trust is a domestic trust that: Changes the timing on how your estate gets taxed Treats your non-citizen spouse more like a citizen Lets the estate allow unlimited marital deductions QDOT TRUST REQUIREMENTS Federal estate taxes are applied to normal estates worth more than $5.45 million. While the $5.45 million is exempt from federal estate taxes, any amount beyond that figure is subject to a 40 percent tax. The money that’s exempted is normally protected by the unlimited marital deduction, which allows you to leave an unlimited amount of your assets to your spouse. The exempted money isn’t taxed until your spouse passes away, but this arrangement only concerns spouses who are U.S. citizens. If your spouse isn’t a U.S. citizen, the government wants the taxes paid upon your death. To prevent this, set up a qualified domestic trust, which must meet the following criteria: At least one trustee must be a U.S. citizen or a U.S. corporation. If the estate is worth more than $2 million, then it’s required that one of the trustees for a domestic trust be a U.S. bank. Said trustee must have the right to withhold tax on any distribution of principal from the domestic trust, or no distributions may be made. The executor of the estate must state on your estate’s tax return that a QDOT trust has been created. This return must be filed within nine months after your death — and once the executor has elected to have the estate become a qualified domestic trust on the tax return, it is irrevocable. Any other regulations put in place by the IRS must also be met. This stipulation has been put in place by the IRS to ensure that you’re aware that your estate may be impacted by any new regulations as they’re enacted. Read more athttps://www.cpafirmnyc.com/qualified-domestic-trust Miller & Company LLP 141-07 20th Ave, Suite 101, Whitestone, NY 11357 +1 718-767-0737 Midtown Manhattan, NY 274 Madison Ave, Suite 402, New York, NY 10016 +1 (646)-865-1444 Manhattan, NYC 18 East 48th Street, #1001 New York, NY 10017 +1 (646) 367-3726 Washington, DC 316 Pennsylvania Ave #402 Washington, DC 20003 +1 (202) 547-9004 Suitland, Maryland 5883 Allentown Rd Suitland, MD 20746 +1 (301) 423-4474 https://www.cpafirmnyc.com
...read more