Offshore Accounts in Estate Planning, Probate, and Administration: Reporting Requirements, Penalties, Pitfalls to Avoid

The government assesses and collects FBAR liability and penalties from beneficiaries and executors after a decedent's date of death and after assets are distributed. Failure to account for offshore accounts and assets can significantly derail the intent of a decedent's estate plan. Trusts and estates counsel must align planning strategies with current U.S. tax law to avoid unintended tax liability, probate issues, and estate administration challenges of foreign assets and accounts.

With thoughtful planning, clients may avoid unexpected aspects of U.S. tax law that could significantly impact family wealth. Estate planners must review a client's foreign assets and accounts and explore the use of certain strategies to protect such assets and other methods of preserving wealth and minimizing income, estate, and gift taxes. Determining a taxpayer's compliance with foreign reporting obligations is a critical step when reviewing, settling, or reporting a decedent's estate.

The penalty for non-willful FBAR violations is $10,000; this can be waived for reasonable cause. Willful non-filing, however, can result in penalties of $100,000 or 50 percent of the account balance, whichever is larger. The U.S. Supreme Court's recent decision in Bittner v. U.S. provides some relief from hefty FBAR penalties for non-willful violations, ruling that it applies on a per report rather than a per account basis. However, the risk of penalties still remains and taxpayers must continue to be proactive with their reporting requirements and filing obligations.

Listen as our panel of experts discusses identifying trusts and estates with foreign reporting obligations, the current government initiative to assess penalties for offshore accounts and assets, avoiding probate, and best practices for bringing taxpayers into compliance.

1. Applicable rules for foreign asset reporting
2. Impact of foreign accounts on estate planning
3. Navigating IRS reporting requirements
   1. FBAR reporting; SCOTUS decision in Bittner v. U.S.
   2. FATCA
   3. Penalties
4. Strategies for foreign accounts and assets to avoid probate

The panel will discuss these and other key issues:

• What is the impact of foreign assets on probate and estate administration?
• How do you handle foreign accounts in estate planning?
• What strategies are available to protect foreign accounts?
• What are the IRS reporting requirements and pitfalls to avoid?
• What is the impact of the recent U.S. Supreme Court decision in Bittner v. U.S.?

Learning Objectives

After completing this course, you will be able to:

• Identify potential foreign asset reporting obligations of trusts and estates
• Discern between willful and non-willful FBAR violations
• Ascertain when Form 3520 must be filed
• Determine the best steps to resolve past noncompliance

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate and gift taxation and reporting, pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.