Which statement is true about QDOT usage?

Which statement is true about QDOT usage?

• A. It bypasses estate taxes entirely.
• B. It requires the surviving spouse to be a U.S. citizen.
• C. It is used to defer estate taxes on the deceased spouse's estate when the surviving spouse is not a U.S. citizen.
• D. It eliminates the need to file an estate tax return.

Answer: (C)

A Qualified Domestic Trust is used to defer estate taxes when the surviving spouse is not a U.S. citizen. By placing the portion of the deceased spouse’s estate that would be taxed into a QDOT, the estate tax is not charged at death; instead, tax is deferred until distributions are made to the noncitizen spouse or upon the surviving spouse’s death. This isn’t a way to bypass taxes entirely—taxes may still become due later. It specifically addresses noncitizen surviving spouses, not citizens, and the estate tax return must still be filed with the QDOT election. So the true statement is that a QDOT defers estate taxes on the deceased spouse’s estate when the surviving spouse is not a U.S. citizen.

A Qualified Domestic Trust is used to defer estate taxes when the surviving spouse is not a U.S. citizen. By placing the portion of the deceased spouse’s estate that would be taxed into a QDOT, the estate tax is not charged at death; instead, tax is deferred until distributions are made to the noncitizen spouse or upon the surviving spouse’s death. This isn’t a way to bypass taxes entirely—taxes may still become due later. It specifically addresses noncitizen surviving spouses, not citizens, and the estate tax return must still be filed with the QDOT election. So the true statement is that a QDOT defers estate taxes on the deceased spouse’s estate when the surviving spouse is not a U.S. citizen.