A qualified domestic trust (QDT) can be a very important part of your estate planning process and can be essential to protect your spouse under certain circumstances. It is important to understand what this kind of trust does, to determine if this kind of trust is the right type of trust for you to create, and to follow all formalities for trust creation in any situation where you need this type of trust to transfer assets without triggering a substantial tax bill.
Parman & Easterday can provide you with assistance in determining if you need a qualified domestic trust based on your family situation. Our legal team can also assist you in the process of creating a QDT if you require one. You cannot afford to take chances on losing a substantial portion of your estate to the IRS instead of being able to pass your wealth onto you closest family member, so you should talk with Parman & Easterday if there is a possibility that you may require a QDT.
Do You Need a Qualified Domestic Trust?
A qualified domestic trust is used to allow the transfer of large estates to a spouse who is not a United States citizen, without your estate being subject to estate tax at the time of your death.
Under the rules of the Internal Revenue Service, one spouse is generally allowed to transfer assets directly to another spouse after death without any worries about estate taxes being charged on transferred assets. This rule exists because there is a basic assumption that when the second spouse passes away, any money and property which wasn’t taxed after the death of the first spouse is now going to have to pass on to someone who isn’t a spouse – and will thus be taxed at that time.
However, this assumption no longer exists if the spouse to inherit is not a citizen of the United States. Under these circumstances, there is concern that the non-citizen spouse could leave the country with the inherited assets and no estate tax would be charged. To avoid this occurring, when money is left to a non-citizen spouse and that money exceeds the amount of cash that is allowed to pass tax free, the excess transferred assets can be taxed.
This could be avoided through the use of a Qualified Domestic Trust. As a result, if you have a non-citizen spouse and your assets exceed the amount you’re allowed to transfer tax free – which is $5.49 million as of 2017 – then you likely should create this type of trust. If the value of your estate is well below this amount, if your spouse who you are leaving money to is a United States citizen, or if you are going to leave your assets to someone other than your spouse, a QDT typically will not be appropriate for your estate planning.
Getting Legal Help with Creating a Qualified Domestic Trust
If you think you may need a QDT, you should contact Parman & Easterday today. Our legal team can carefully review your situation and provide advice on whether you should create this type of trust. We can also advise you on other types of trusts that you may wish to make part of your estate plan and can help you to follow the legal formalities for creating a qualified domestic trust.
A substantial amount of money could be at stake if your assets that you leave to your husband or wife end up being taxed. You don’t want to take a chance on this happening, and on your spouse facing a reduced quality of life or losing valuable property because of a death. Let our legal team assist you in following the rules to make a legally valid trust that provides the protections you need for your assets.
Contact an Estate Planning Lawyer Today
There are many different kinds of trusts that could be a part of your estate plan, and many other tools that are also beneficial during the estate planning process. A qualified domestic trust is just one way that you can try to protect your assets and maximize the value of an inheritance. You need to find out about the right tools to incorporate into your estate plan and the different ways that you can make the law work to protect you and your family. Parman & Easterday can help.
To find out some basic facts about the estate planning process, join us for a free seminar. You can also give us a call today at (405) 843-6100 or (913) 385-9400 or contact us online to get personalized advice from an estate planing attorney. Call today to find out how we can help.