Ch 11 - Estate Planning For Non US Citizens Flashcards
●Transferor is a resident or citizen and normal gift and estate tax rules apply
●If transferee is not a citizen……..Marital deduction is not available
How are Transfers to a Non-Citizen Spouse handled
●U.S. citizens - all transfers subject to federal transfer tax
●Resident-aliens - all transfers subject to federal transfer tax
●Nonresident-aliens - transfers of U.S. situs property subject to estate tax
What are the differences between Citizenship & Noncitizenship in estate tax
●Obtain U.S. citizenship Before filing of decedent-spouse’s estate tax return AND
●Remain U.S. resident alien Qualified domestic trust (QDOT)
What is the Marital Deduction Eligibility
●One (or more) U.S. trustee
●Trust provision: non-income distributions have tax withheld
●U.S. domiciled trust or in foreign jurisdiction governed by U.S.
●Qualifying marital deduction trust format
●QDOT treatment election
●Income and hardship distributions estate-tax free
What are the QDOT Requirements
By:
●Decedent-spouse’s will or living trust
●Surviving spouse
●Decedent-spouse’s executor
How is a QDOT Created?
●Lifetime distributions to surviving spouse except for income or for hardship
●Distributions at survivor’s death
●Trust failure to meet QDOT requirements
●Payments of taxes by the QDOT
How are QDOT Distributions taxed
Immediate, substantial financial need by surviving noncitizen-spouse or person with legal support obligation for:
- Health
- Education
- Maintenance
- Support
What’s a QDOT Hardship Anyway?
●Citizenship
●Hardship withdrawals
●Charitable contribution of QDOT remainder
●Remarriage
●Super-annual exclusion gifts
•Annual exclusion for gifts to non-citizen spouse increased to $100,000 indexed for inflation ($143,000)
●Life insurance
What are the 6 Ways to Reduce the QDOT Burden
•Annual exclusion for gifts to non-citizen spouse increased to $100,000 indexed for inflation ($143,000)
Super-annual exclusion gifts
