Structuring U.S. Trusts Classified as Foreign Trusts for Income Tax Purposes

This CLE/CPE course will provide a deep dive into the planning opportunities and reporting requirements for U.S.-based trusts that must file as non-domestic trusts for income tax purposes. The panel will discuss what constitutes "substantial decisions by non-U.S. persons" for trusts, structuring considerations to maximize income tax savings by utilizing a U.S.-based foreign trust.

Even though a trust is incorporated in the U.S., with a U.S.-based trustee, it may still be required to be classified as a foreign trust for purposes of U.S. income tax reporting and withholding. Trusts with non-U.S.-based persons making material decisions on the operation of the trust and trusts with non-U.S. settlors must be treated as foreign trusts, even if based in the U.S., and follow the more complicated filing rules for non-domestic trusts.

This classification difference provides sophisticated planning opportunities for tax counsel advising both resident and nonresident individuals. Increasingly, foreign-based trust companies are relocating trusts previously operating offshore into the United States, and U.S.-based trust companies are following suit.

By structuring a trust document properly, tax counsel can help clients maximize both privacy from disclosure and income tax savings.

Listen as our experienced panel of expert advisers provides a practical guide to navigating the complexities of the planning opportunities of U.S.-based foreign trusts.