Foreign Trust Reporting Rules and Distribution Planning for U.S. Beneficiaries
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Estate Planning
- event Date
Thursday, January 23, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
This CLE/CPE course will provide estate planners and tax counsel comprehensive guidance on the reporting rules for foreign trusts under U.S. tax law. The panel will discuss key provisions of the Internal Revenue Code applicable to foreign trusts, the reporting regime for U.S. taxpayers' ownership of foreign trust assets, gift and estate tax treatment, and reporting obligations of U.S. beneficiaries of foreign trusts and non-grantor trusts. The panel will provide an in-depth review of Form 3520 and discuss distribution planning for foreign trusts with U.S. beneficiaries.
With more than 30 years of experience, Mr. Lipoff specializes in the delivery of domestic and international private client services to enable high-net-worth individuals and families to maximize their new or generational wealth. He provides strategic advice to his clients and their closely held businesses in the areas of income tax planning and compliance, estate planning and administration services, as well as family structure consulting. Through many years in practice, he synthesized the work of various related professionals, and their firms integrate several planning strategies into solutions that maximize value. Mr. Lipoff is a frequent lecturer and author of articles published through professional forums on topics including domestic and international - estate planning and fiduciary income taxation including constructive attribution rules for foreign trusts, Forms 3520 & 3520-A, Graegin Loans, business succession, generation-skipping transfers, Chapter 14 and carried interest estate planning for private investment fund principals, preferred freeze partnerships, and private placement life insurance.
Mr. Warshaw has nearly 40 years of experience as a U. S. estate planning and tax lawyer. He currently represents U. S. and non-U. S. high net worth individuals, families and companies on a wide range of personal and business tax matters, especially in connection with cross-border income and estate tax planning and compliance in the U. S. Mr. Warshaw is admitted to practice in the Commonwealth of Massachusetts. He regularly advises non-U. S. clients on structuring inbound pre-immigration tax strategies including basis step-up in legacy assets, avoiding the U. S. CFC and PFIC anti-deferral tax regimes, optimizing use of foreign tax credits, minimizing green card status as well as advising on and drafting of “drop-off trusts.” Mr. Warshaw also advises long-term green card holders and U. S. citizens on planning to minimize their U. S. exit tax through gift programs, managing equity compensation and by drafting “expatriation” trusts and considerations of a change of domicile outside the U. S. He has also counseled clients in complying with their U. S. tax filing obligations by engaging accountants and bringing such taxpayers into compliance with their numerous U. S. international tax reporting requirements. Mr. Warshaw has also advised on the U. S. international tax aspects of cryptocurrency, including how to become U. S. tax compliant and how to mitigate U. S. tax implications prior to and following renouncing U. S. citizenship.
Mr. Lesperance is one of the world’s leading international tax and immigration advisors. He has successfully advised scores of high and ultra high net-worth individuals and their families, many of whom continue to seek his counsel today. In addition Mr. Lesperance has provided pro bono advice to many governments on how to improve their Citizenship by Investment, Residence by Investment or “Golden Visa” type programs to better meet the needs of his global clients. He is supported by a team of professionals, some of whom have worked with him since the early 1990s.
U.S. owners and beneficiaries of foreign trusts are subject to complex tax rules and reporting obligations that are different from those applicable to domestic trusts. Tax and estate planners must recognize the variety of tax issues associated with foreign trusts with U.S. owners or beneficiaries.
Tax and estate planners must determine under U.S. tax rules whether an arrangement is a trust, the residency of the trust as foreign or domestic, and the characterization of the trust. Determination of a trust's residency and characterization will determine the potential income and estate tax impact to the beneficiaries, including potential attribution of ownership entities owned by the trust and complex information reporting obligations.
For beneficiaries of foreign trusts, Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, presents significant complexity under current tax law. Even if no transactions related to the trust occurred during the tax year, the IRS requires taxpayers who owned any part of the assets held in a foreign trust, received a distribution from a foreign trust, or who qualify as the responsible party for reporting a foreign "reportable event," to file Form 3520.
Tax and estate planning advisers must establish strategies to ensure that U.S. owners and beneficiaries of foreign trusts avoid any unintended tax liability on interests of foreign trusts, including such trusts' interest in foreign partnerships or corporations while avoiding foreign anti-deferral rules.
Listen as our panel discusses key provisions of the Internal Revenue Code applicable to foreign trusts, the reporting regime for U.S. taxpayers' ownership of foreign trust assets, gift and estate tax treatment, Form 3520, and other key items regarding foreign trust reporting.
- Issues of foreign trusts with U.S. beneficiaries in estate planning
- Determining tax residency and applicable rules
- Understanding tax rules and reporting obligations of foreign trusts for U.S. estates and taxpayers
- Foreign grantor trust vs. foreign non-grantor trust
- Obtaining a tax-free step-up in basis
- Applicability of foreign anti-deferral rules and methods to avoid them
The panel will discuss these and other key issues:
- What are the filing requirements for the U.S. beneficiary of a foreign trust?
- Avoiding pitfalls of complex tax rules and reporting obligations
- Understanding residency rules and the use of domestication to benefit the estate
- What "reportable events" trigger a Form 3520 filing requirement?
- What is the overlap between Form 3520 and other foreign information reporting requirements?
- What are the penalties and relief provisions for failing to file necessary forms?
- Effective techniques to avoid foreign anti-deferral rules
- Best practices for counsel regarding the taxation of foreign trusts
Learning Objectives
After completing this course, you will be able to:
- Understand key U.S. tax provisions as applied to foreign trusts
- Determine which taxpayers are subject to Form 3520 reporting requirements
- Discern what transfers and ownership structures must be reported
- Acquire methods to obtain a tax-free step-up in basis
- Recognize the IRS audit process for determining Form 3520 or 3520-A delinquency
- 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 at mid-level within the organization, preparing complex tax forms and schedules for U.S. taxpayers owning or receiving payments from non-US retirement accounts; supervisory authority over other preparers/accountants. Specific knowledge and understanding of basic reporting requirements for U.S. taxpayers with foreign retirement account interests; familiarity with FBAR, FATCA and For 3520 filings
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.
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