If you are married to a non-citizen spouse and you wish to pass on your estate assets to your spouse in the event of your death you may need to include a QDOT trust in your comprehensive estate plan. Failing to do so could result in the loss of substantial estate assets to gift and estate taxes.
In the 21st century it is not uncommon for people to travel the globe on a regular basis for business and/or pleasure. Not surprisingly, these world travelers often find the love of their life during their travels. If you found, and married, a foreign born spouse and he or she has never applied for U.S. citizenship you must take this into account in your estate plan. The reason for this is that the unlimited marital deduction, something that married couples often rely on, does not extend to non-citizen spouses. The unlimited marital deduction usually allows you to leave your spouse an unlimited amount of assets when you die free from gift and estate taxes. For moderate to large estates, the unlimited marital deduction can shelter assets that exceed the lifetime exemption limit, set at $5 million and adjusted annually for inflation, from taxation. If your spouse is not a U.S. citizen, however, the marital deduction cannot be used to shelter assets. A QDOT trust is often the best solution.
A QDOT trust in St. Louis allows you to transfer an unlimited amount of assets into the trust to help support your non-citizen spouse in the event of your death. Although your spouse does not have access to the principal of the trust (except in limited circumstances), the interest earned by those assets is distributed to your spouse on a regular basis for his/her support. Upon the death of your spouse the principal of the trust is then distributed to designated beneficiaries such as your children. Any gift and estate taxes are not paid on the assets until they are distributed to the non-spouse beneficiaries after sour spouse’s death. While the trust principal isn’t usually accessible to your spouse, there is an exception to this general rule. If your spouse, or someone your spouse is legally obligated to support, has an “immediate and substantial” need for money relating to “health, maintenance, education or support” it is possible to access the trust principal.
Very specific rules apply to a QDOT trust in St. Louis, such as the requirement that the trustee be a U.S. citizen. The complexity of a QDOT trust makes it imperative that you consult with your St. Louis estate planning attorney if you believe a QDOT may be a beneficial addition to your estate plan.