The marital deduction benefit allows one spouse to pass on unlimited amount of property
to the other spouse by Will or gift without suffering any federal estate or gift taxes. However, this benefit is not necessarily available to a spouse who is not a US citizen without recourse to the machinery of Qualified Domestic Trusts.
Through the use of Qualified Domestic Trust property can be left there with the said trust entity for the benefit of the non citizen spouse without incurring federal estate taxes. The trustee for such trust must be a US citizen or corporation. However, if the assets of the trust are greater than $ 200000, the trustee must be an US bank. Income from the trust can be distributed to the surviving spouse without attracting the levy of estate tax. However, appropriation of the principal is liable to federal estate tax.
Upon the death of the surviving spouse or termination of the trust, the distributed principal is subject to federal estate tax.
(More http://www.law.cornell.edu/uscode/26/
http://acronyms.thefreedictionary.com/
http://tax-forms.taxworld.org/ )
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