U.S. Grantor Trusts With Israeli Resident BeneficiariesU.S. Grantor Trusts With Israeli Resident Beneficiaries

Trusts created in the United States require special consideration and care if the trust agreement allows for distributions to be made to an Israeli resident beneficiary. Israeli trust tax laws apply to any trust whenever a single beneficiary resides in Israel. These tax laws came into effect in Israel in 2014, and they apply to any U.S. trust with an Israeli resident beneficiary, including trusts created before 2014.¹

Further, Israeli law applies even if the only nexus to Israel is the residence of a beneficiary. This means a trust can be created by a U.S. resident with assets located exclusively in the United States and managed by a U.S. resident trustee for mostly U.S. resident beneficiaries. With only a single Israeli resident benefici...