XIX.   Foreign Trusts

The taxation of foreign trusts, and reporting thereof, is very complex and extensive. Even a "simple" explanation is beyond the scope of this guide. Needless to say, seek advice in such situations.

Note that current requirements may not only apply to foreign trusts created by Americans, but also to foreign trusts which have US beneficiaries and to foreign trusts where the grantor subsequently becomes a US resident.

Perhaps the greatest use of foreign trusts in recent years, has been for asset protection purposes, by very wealthy individuals. The compliance cost relating to foreign trusts is much higher than for US trusts. Several US States have now changed their laws to make it more beneficial to create trusts under their legislation.