Estate and Gift Tax Planning with Foreign Trusts and U.S. beneficiaries

This program will provide the participant with the fundamentals of the taxation of foreign trust distributions received by a U.S. taxpayer, and an understanding to avoid penalties associated with accumulated foreign trust income (i.e., Throwback Tax). Additionally, participants will be exposed to civil law wealth transfer structures and determination of their U.S. tax implications and the implications utilizing offshore companies as part of the wealth transfer structure.

In this live webinar, you will know and understand:

• The difference between the U.S. and foreign trust
• The U.S. tax treatment of a foreign grantor and non-grantor trust
• The reporting requirements of U.S. beneficiaries and gift recipients
• The taxation of foreign trust distributions in the hands of a U.S. person
• The interaction and tax implications of underlying companies and their tax treatment as controlled foreign corporations or passive foreign investment companies
• How to use foreign and U.S. trust structures in tandem to achieve a family’s objectives for its U.S. and foreign beneficiaries?
• Some of the commonly used tax planning mechanisms

Topics of discussion will include:

• What distinguishes a foreign trust from the U.S.?
• Court and Control tests 
• Safe harbor rules
• Substantial decisions
• U.S. and foreign co-trustees
• U.S. trusts treated as foreign trusts
• How to determine if a trust is a grantor or nongrantor trust?
• When does a foreign grantor trust become a foreign nongrantor trust?
• Date of death and incapacity issues
• Taxation of U.S. beneficiaries of foreign nongrantor trusts
• Computing distributable net income
• Expenses allowed under the newly enacted TCJA
• Distribution ordering rules
• Treatment of net capital losses
• Accumulated foreign trust income (undistributed net income)
• Use of foreign trust property
• Throwback Tax
• Rules
• Minimization strategies
• Default method
• Calculation
• Minimization strategy
• Civil law wealth transfer mechanisms
• Utilization of offshore companies
• Benefits and exposures

More and more families are using the U.S. for trust and family wealth structuring, which is generally a derivative of their offshore structure. Many of these families have a connection to the U.S. by way of family members being U.S. citizens or U.S. permanent residents (green cardholders). FATCA and CRS generally require the reporting of some of the assets within the structure to the U.S. and parties to CRS. So, it is very important to understand:

• How do these rules operate?
• What the reporting requirements are? 
• How to use these rules to develop planning strategies that meet the family’s objectives?

• Trust and estate attorneys
• Trustees and trust officers
• Accountants
• Financial planners
• Trust and estate planners
• Family office

For over 25 years, Jack has specialized in wealth tax matters for international private clients. He is widely published on various matters in the U.S. and abroad. He presents at international, as well as domestic conferences, on various international private client matters and investment, in the U.S. real property. He acts as outside counsel and consultant for a number of U.S. and foreign trust companies, on highly complex foreign trust matters.

In 2004, Jack had an article published in Trusts & Estates professional journal, namely, Foreign Trusts: The Capital Loss Debate. This article is still regarded, in the professional community, as the standard for U.S. tax treatment of net capital losses for U.S. beneficiaries of foreign non-grantor trusts.