Which of the following is NOT an accepted method of creating a QDOT?

• A. By terms of trust or will.
• B. By the spouse within one (1) year of decedent's death.
• C. Initiated by spouse or executor and completed before a timely filing of the estate tax return.
• D. By irrevocable assignment of interest to an arrangement which meets QDOT requirements.

Answer: (B)

Qualified Domestic Trusts are used to defer estate tax when the surviving spouse is not a U.S. citizen. A QDOT is created by including the arrangement in the terms of the trust or will, or by transferring assets into a qualifying QDOT arrangement via an irrevocable assignment. The election to treat the trust as a QDOT can be initiated by either the spouse or the executor and must be completed by the deadline for filing the estate tax return. The idea that a QDOT can be created simply by the spouse acting within one year after death isn’t accurate, because the QDOT must be established through a trust instrument or an irrevocable transfer, with the formal election filed by the estate by the required filing deadline.