A qualified domestic trust (QDOT) is a trust created for a surviving spouse who is a non-U.S. citizen to qualify for the marital deduction. It allows a non-U.S. citizen married to a U.S. citizen to be eligible for an unlimited marital deduction that keeps the decedent's estate from being taxed federally at the time of their death.
Under the Internal Revenue Code, the surviving spouse is not required to pay tax on the estate of the first deceased spouse if they are a U.S. citizen. A non-citizen surviving spouse, on the other hand, does not qualify and may instead retain the marital deduction for assets within that trust through a qualified domestic trust.
See: 26 U.S.C. ยง 2056(d)(2).
[Last updated in March of 2022 by the Wex Definitions Team]