In the South Bay communities of Chula Vista, National City, and San Ysidro, as well as elsewhere in San Diego County, there are many individuals who have spouses that are not U.S. citizens. Such couples have different estate planning concerns than those where both spouses are citizens.
In California when a spouse dies, the surviving spouse is entitled to an federal estate tax marital deduction. This permits the deceased spouse to leave unlimited assets to a surviving spouse, either outright or in a trust, with no estate tax liability. This only applies however if the surviving spouse is a U. S. citizen.
There is a solution to this problem. If you are a married couple and one spouse is not a U.S. citizen, the way to protect your assets is a with a special type of revocable living trust called a QDOT (Qualified Domestic Trust). A QDOT is a special type of marital trust that allows a non U.S. citizen spouse to inherit without being immediately obligated to pay estate taxes. These types of trusts are subject to strict requirements by the IRS and must be properly drafted to achieve this result.
To see if a QDOT trust is appropriate for you, contact us at Law Office of Scott C. Soady, A Professional Corporation for a free in-house consultation. You may call or e mail us with this or any other estate planning issue.