Care for Your Off-Shore Beneficiaries
Foreign families with loved ones in the U.S. may wish to set up a foreign grantor trust.
The foreign grantor trust allows international families to take advantage of tax benefits, increased flexibility, political stability, and secure asset protection laws.
What is a Foreign Grantor Trust?
A foreign grantor trust is both a foreign trust and a grantor trust. The trust is not subject to U.S. income tax on income produced by non-U.S. situs assets.
A revocable foreign grantor trust established in the U.S. remains revocable until the death of the grantor at which time it becomes irrevocable. The irrevocable trust benefits the U.S. beneficiary, but any U.S. situs assets are then subject to U.S. tax.
If the settlor has the power to revoke the trust, it is considered a revocable trust for U.S. tax purposes.
If the grantor is both the settlor and owns the assets in trust, it is also considered a grantor trust and is not subject to U.S. tax on non-U.S. sourced income.