Usually, gifting to a spouse and thus securing their financial stability can be done without having to worry about gift or estate taxes. However, complications arise when the spouse is not a US citizen, as the gift is taxed and there is not an exception for trusts. The answer lies in a Qualified Domestic Trust (QDOT). By adding QDOT language to a standard Charitable Remainder Trust (CRT), the non-citizen spouse can have a tax exempt trust set up for them. Though some key changes need to be made to the CRT to make it an effective QDOT-CRT, so thorough research should be done first.
See Renaissance, Case Study: QDOT-CRT for Non-Citizen Spouse, Charitable Planning, May 22, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
