Trust, Estate and Family - 29 Oct 2015
As the 2015 tax year draws to a close, it is important to consider the US tax system’s impact on the international trust world. FATCA (the Foreign Account Tax Compliance Act) continues to bring IRS attention into many situations where the US was previously not a direct concern.
In spite of this, well-established income tax planning considerations should be reviewed before year-end where a trust does have a US connection either at the settlor or beneficiary level.
Areas For Consideration Include:
Distributions Of Current Year Income To Non-US Beneficiaries
This does require careful planning in terms of timing and review of the trust accounting, but is certainly worth considering where the fact pattern is helpful.
Payment Of Foreign Taxes
Capital Gains Position For Foreign Non-Grantor Trusts
The above planning opportunities are very much dependent upon the specific circumstances of each trust and certainly do not cover all possibilities.
Foreign Account Tax Compliance Act
Should the trustees obtain new information regarding US connections this may have an impact on the income tax reporting requirements in the US, as well as consideration of the year-end planning options discussed above.
 i.e. The settlor is not considered to be the owner of the trust assets
 i.e. Distributable Net Income
 In the case of foreign grantor trusts
 In the case of foreign non-grantor trusts
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