When a U.S. grantor makes a gratuitous transfer to a foreign trust that has one or more U.S. beneficiaries or potential beneficiaries of any portion of the trust, that foreign trust is considered a grantor trust for U.S. income tax purposes. The trustee of a foreign grantor trust with a U.S. owner is required to file appropriate US tax forms with the IRS each year. Such forms include:
- An accounting of the trust’s activities for the year
- A “Foreign Grantor Trust Owner Statement” to each U.S. owner of a portion of the trust
- A “Foreign Grantor Trust Beneficiary Statement” to each U.S. beneficiary who received a distribution during the taxable year
These forms can be complex and extremely time consuming, and there are few tax firms that have the knowledge to prepare them. Our firm can help you satisfy your reporting obligations.