This U.S. Law Trust is Foreign!This U.S. Law Trust is Foreign!

Causing a trust settled under the law of a U.S. state to be classified as a foreign trust for U.S. federal income tax purposes is easy. It can be equally easy for a foreign trust classification to happen accidentally. While there are ways to cure this accident without U.S. tax consequences, it’s increasingly more common for a client’s facts to present a recipe for this situation to occur as the world grows smaller. Consider a green card holder, domiciled in the United States, desiring to settle a revocable trust as part of a core estate plan. There’s a much greater probability that the green card holder will have (and want) a non-U.S. family member to serve a role under the trust’s terms or, in the alternative, that the non-U.S. family m...