• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Our Firm
    • About Our Firm
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • Communities We Serve
      • Minnesota
        • Bemidji
        • Crookston
        • East Grand Forks
        • Fertile
        • Thief River Falls
      • North Dakota
        • Devils Lake
        • Dickinson
        • Grafton
        • Grand Forks
        • Minot
    • Job Opportunities
    • Speaker Connection
  • Estate Planning
    • Asset Protection
    • Business Planning
    • Elder Law & Medicaid Services
    • Estate And Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Financial Planning Assistance
    • Incapacity Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • Probate
    • SECURE Act
    • Special Needs Planning
    • Trust Administration
  • Elder Law
    • Are You A Caregiver
    • Conservatorship
    • Coping with Alzheimer’s
    • Hospice Care
    • Life Care Planning Services
    • Medicaid Benefits
    • Nursing Home Planning
    • Veterans Benefits
  • Seminars/Webinars
  • Resources
    • Client Resources
      • Estate Planning Resources for Farmers
      • Elder Law Resources
        • Bemidji
        • Grand Forks Elder Law
        • Minot Elder Law
        • Thief River Falls Elder Law
      • Estate Planning Checklist
      • Is Your Estate Plan Outdated?
      • Probate Checklist
      • Probate Resources
        • Bemidji Probate
        • Grand Forks Probate
        • Minot Probate
        • Thief River Falls Probate
      • Relocation Toolkit
      • Top 10 Estate Planning Techniques
    • DocuBank
    • Elder Law Reports
    • Free Medicaid/Long-Term Care Calculator
    • Frequently Asked Questions
      • Asset Protection
        • Business Planning
        • Business Succession Planning
      • Elder Law
        • Medicaid Planning
        • Veteran’s Benefits
        • Nursing Home Planning
      • Estate Planning
        • Estate Planning & Divorce
        • Estate Planning for Women
        • Job of an Executor
        • Families Without an Estate Plan
        • Gift, Estate, and Inheritance Taxes
        • Including Philanthropy in Your Estate Plan
        • Including Your Pet in Your Estate Plan
        • LGBTQ Estate Planning
        • Power of Attorney
        • Serving as Executor
      • Financial Planning
      • Incapacity Planning
        • Social Security Benefits
        • Understanding SSI and SSDI
      • Trust Administration & Probate
        • Probate
        • Small Estate Probate
        • Trusts
        • Wills
    • Newsletters
    • Probate & Estate Planning Savings Calculator
    • Professional Resources
    • Published Books
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning for Niches
      • Trust Administration
  • Reviews
    • Our Reviews
    • Review us
  • Contact Us
  • Blog

GermanLawGroup

Estate Planning & Medicaid Attorneys in Grand Forks , North Dakota

Call us today(800) 774-7576

  • Facebook
  • Twitter
  • Linkdin
  • Instagram
  • Youtube
Attend A Free Seminar
Home » Do I Need a QTIP or a QDOT?

Do I Need a QTIP or a QDOT?

June 23, 2020Trust

Minot trust attorneyTrusts are among the most common estate planning tools and are frequently found in an estate plan. Both the QDOT and the QTIP trust are among the most popular trusts used by married couples. A Minot trust attorney at German Law helps you decide whether a QTIP or a QDOT trust is right for you.

Qualified Terminable Interest Property (QTIP) Trust

Any married couple can make use of a QTIP trust; however, it is most often used as a way to handle the distribution of assets in a blended family. If you were married previously and have children from that marriage, you probably created reciprocal estate plans. You left all your assets to your spouse with the understanding that he/she would then pass those assets on down to your children upon death and your spouse did the same.  Now that you are remarried, however, that strategy no longer works. The dilemma you now face is that you likely want to provide for your current spouse while still setting aside assets for your children from your first marriage. You could leave everything to your current spouse and trust that he/she will leave those assets to your children upon death. Not only does that require a tremendous amount of trust in your spouse, but it also does not account for a whole host of intervening problems that could deplete the assets you intend to be passed down to your children. Your children could wind up with nothing.

A QTIP trust may be the answer to your dilemma. A QTIP trust is designed to provide for your spouse while protecting your children’s inheritance. You will need to appoint a Trustee to oversee the administration of the trust and to manage the trust assets. Assets transferred into the QTIP trust are not actually gifted to your current spouse when you die. Instead, your spouse receives income from the trust assets but cannot withdraw the principal from the trust nor can he or she decide on the ultimate disposition of the trust assets. In the case of real property, your surviving spouse may also receive a “life estate” in the property, meaning that he or she may remain in the home until death, but will never own the property outright. When your surviving spouse dies all assets held in the trust are then transferred to the intended QTIP trust beneficiaries, typically your children from a previous marriage. Although a QTIP trust does not qualify to use the Marital Deduction rule to defer federal gift and estate taxes under traditional tax rules, the Executor of your estate can elect to use the deduction on your estate tax return.

Qualified Domestic (QDOT) Trust

As the name implies, the unlimited marital deduction allows you to leave an unlimited amount of assets to a spouse tax-free.  Unfortunately, the deduction is not available to a non-citizen spouse though. The reason behind this is simple. The unlimited marital deduction sounds great; however, all it usually does is delay the payment of gift and estate taxes. Ultimately, the surviving spouse ends up paying the tax debt when he/she dies. If the surviving spouse is a non-citizen though, there is a very high probability that the assets will be moved out of the country prior to his/her death and Uncle Sam will not receive anything. To protect against this happening, the deduction cannot be used if your spouse is a non-citizen.

A QDOT provides a solution to the problem created by the exception to the unlimited marital deduction. With a QDOT, you are able to transfer all assets intended for your spouse’s benefit into the trust and your spouse will be entitled to the interest from those assets but will not own the assets. Your spouse will not be entitled to access the principal held in the trust unless he/she can demonstrate a hardship need. The only time your spouse can access the principal is if your spouse can demonstrate an “immediate and substantial” need for money relating to “health, maintenance, education or support” of either your spouse or someone your spouse is legally obligated to support, such as a child. Upon the death of your surviving spouse, the assets held in the trust will be distributed to the beneficiaries named in the trust, usually children and/or grandchildren. If any federal and/or state estate taxes are due at that time they will need to be paid at the time of distribution.

Contact a Minot Trust Attorney

Please join us for an upcoming FREE seminar. If you have additional questions about how a QTIP or a QDOT trust may fit into your estate plan, contact a Minot trust attorney at German Law by calling 701-738-0060 to schedule an appointment.

  • Author
  • Recent Posts
Raymond German, Estate Planning Attorney
Raymond German, Estate Planning Attorney
Attorney at German Law | Wealth
Raymond J. German provides a wide range of estate planning services to his clients, with a primary focus on creating peace of mind providing for the security of their loved ones, reducing taxes and avoiding a probate, all with a well-crafted estate plan. Mr. German defines the mission statement for German Law as “Helping one family at a time pass on values, beliefs and finances, that can be shared for generations to come.”
Raymond German, Estate Planning Attorney
Latest posts by Raymond German, Estate Planning Attorney (see all)
  • Estate Planning Steps for the Beginner - January 26, 2023
  • Common Medicaid Myths Debunked - January 19, 2023
  • Why Single Adults Need an Estate Plan - January 17, 2023

Other Articles You May Find Useful

When Should I Update My Trust?
When Should I Update My Trust?
Trust Mistakes to Avoid
Trust Mistakes to Avoid
How Your Trustee Can Threaten the Success of Your Trust
How Your Trustee Can Threaten the Success of Your Trust
Why Would I Want a Trust to Be Defective?
Why Would I Want a Trust to Be Defective?
How Can a Trustee Cause a Trust to Fail?
How Can a Trustee Cause a Trust to Fail?
Reasons to Create a Living Trust
Reasons to Create a Living Trust

Primary Sidebar

TESTIMONIALS

Client Review
August 24, 2020
    

Needed to come in to get specific advice for our needs. The attorney spoke to us in terms we could understand, coming to our level and did not make up feel uncomfortable. They were very considerate and caring. We didn’t feel rushed. We felt like they cared and knew what they were doing.

C.P., Minnesota
Client Review
August 24, 2020
    

We were wonderfully satisfied. Wayne did an outstanding job of explaining, diagramming and answering questions and concerns.

JW & CD, North Dakota
Client Review
August 24, 2020
    

They were courteous, efficient, knowledgeable, and trustworthy.

D.T., Minnesota
Client Review
August 24, 2020
    

Very helpful. Our children and us are are confident in your group.

-Anonymous, Fargo, North Dakota
Client Review
August 24, 2020
    

"Very professional, covered all, expertise, friendly, peace of mind now."

- Anonymous, North Dakota
Client Review
August 24, 2020
    

So much of a client's high or low opinion of an organization depends on their welcomed feeling. I felt that every time I visited the office, every person I talked with listened and took action on my concern or questions! They were also very friendly.

~J.R., Grand Forks, ND
Client Review
August 24, 2020
    

From phone calls to signing the final documents I was treated with respect, kindness, and understanding by Wayne & Jenn. Every business that wants their business represented well should have someone like Jenn & Wayne. They both made me feel relaxed and assured I was at the right place at the right time at this time in my life. 

~ Deborah Rucinksi, North Dakota 
Client Review
August 24, 2020
    

All of the paperwork was completed in a timely matter. Wayne was very good in explaining the trust to us. 

~Anonymous
Client Review
August 24, 2020
    

Thank you for taking care of my finances after I am gone. I worried about probate once; hopefully this has been solved. Everyone was very polite and helpful. Thank you Katie for answering my questions, and also Jenn.

- Anonymous
Client Review
August 24, 2020
    

This Avvo rating is killer and so deserved! You are the best brother! The only thing is I think the 10 rating is too low, in my book you go to 11! Congratulations on the award, you should be very very proud. See you at your Holiday party, thx for the invite.

Anthony G., Los Angeles, CA
Client Review
August 24, 2020
    

Everyone at German Law was helpful and pleasant. I felt good about my decision, I thought I was doing the right thing for myself & my family. Wayne took his time and didn't rush, which is good because a lot of this can be over people's heads.

A.W., Red Lake Falls, MN
Client Review
April 15, 2021
    

Excellent

Very interesting, informative and valuable information and ideas.

Valuable information.

RP
Client Review
April 15, 2021
    

5 STARS! Thanks for allowing this to be on a webinar! Very interested in this topic.

Great Estate Planning Guide

SD
November 25, 2022
    

John provided very short turn-around time that we needed. He built an amortization schedule that really met our needs. He was responsive and very easy to work with! Quick and easy!

 

Cammy was also very helpful and professional!

November 25, 2022
    

Really Liked it.
Assisted by John Oelke

November 25, 2022
    

Excellent!

<
>

Subscribe to Our Blog

Subscribe to our blog to get the latest estate planning news and updates!
  • This field is for validation purposes and should be left unchanged.

FREE ESTATE PLANNING WORKSHEET

  • This field is for validation purposes and should be left unchanged.

Where We Are

German Law
2650 32nd Avenue South, Suite O
Grand Forks, ND 58201
Phone: (701) 738-0060
Fax: (701) 738-0064

See Larger Map Get Directions

Office Hours

Monday8:00 AM - 12:00 PM and 1:00 PM - 5:00 PM
Tuesday8:00 AM - 12:00 PM and 1:00 PM - 5:00 PM
Wednesday8:00 PM - 12:00 PM and 1:00 PM - 5:00 PM
Thursday8:00 AM - 12:00 PM and 1:00 PM - 5:00 PM
Friday8:00 AM - 12:00 PM

Map

Footer

  • Speaker Connection
  • Advantages of Working With Our Firm
  • About The American Academy
  • Sitemap
  • Contact Us

Connect to Us

  • Facebook
  • Twitter
  • Linkdin
  • Instagram
  • Youtube
footer-logo

© 2023 German Law
All Right Reseved.

Attorney Advertisement