What is a Qualified Domestic Trust?
If the surviving spouse is not a U.S. citizen, no marital deduction is allowed unless the assets to be transferred to the surviving spouse are instead transferred to a qualified domestic trust, also called a QDT. The marital deduction allows married couples to transfer assets between themselves at death without subjecting those assets to the federal estate tax. At least one trustee of a QDT must be a U.S. citizen or a domestic corporation, such as a bank or trust company. The trust document must also provide the no distribution can be made from the trust unless the trustee who is the U.S. citizen or domestic corporation has the right to withhold federal estate taxes from the distribution.
