US grantor (US citizen or resident): The trust itself will not be subject to US income tax. A trust is considered a grantor trust when the grantor retains a certain degree of dominion and control over the assets of the trust and is thus treated as the owner of the trust for US federal income tax purposes.

Who can be named as a trustee?

Depending on the type of trust you are creating, the trustee will be in charge of overseeing your assets and the assets of your loved ones. Most people choose either a friend or family member, a professional trustee such as a lawyer or an accountant, or a trust company or corporate trustee for this key role.

Can a trust be a US citizen?

Most comprehensive estate plans are centered around a revocable living trust. However, if a trust names a non-U.S. Citizen or a U.S. Citizen who resides in another country as a Successor Trustee, the trust could be considered a “foreign trust” by the IRS, resulting in adverse tax consequences.

Is a bank account considered a trust?

A trust checking account is a bank account held by a trust that trustees may use to pay incidental expenses and disperse assets to a trust’s beneficiaries, after a settlor’s death. And as bank deposit accounts, trust checking accounts are insured by the Federal Deposit Insurance Corporation (FDIC).

Can a non-US citizen be a trustee of a US trust?

Non-US Citizen Trustees Naming a non-US citizen as a trustee may result in the trust being considered a foreign trust. A US citizen trustee will not likely incur additional income tax consequences because the trust will be likely be considered a domestic trust and taxed accordingly.

Can a non-US citizen have a will?

The answer is yes; noncitizens can inherit property just as citizens can. So when you make your will or living trust, or name beneficiaries for your retirement accounts or life insurance policies, there is no problem with naming your noncitizen spouse.

Can a non-US citizen use a US Trust?

The US is no exception. Many domestic estate planning lawyers recommend that their clients use trusts – often even as substitutes for traditional wills (although, even with a well-drafted trust, we still recommend having a will in place). For non-US citizens, trusts can be extremely effective estate planning tools, as well.

Who is a US person for a trust?

Our recommendations for the establishment of US Trusts will depend on whether the Settlor (or Grantor) of the trust is a US person or not. For tax purposes, a US person means an individual who is a US citizen or a permanently resident alien (known colloquially as a “Green Card” holder).

Do you have to report income from a foreign trust?

Foreign grantor trusts: 1. U.S. grantor (U.S. citizen or resident): During his or her lifetime, the U.S. grantor must report all items of trust income and gain on his or her Form 1040, U.S. Individual Income Tax Return, for the year earned. The trust itself will not be subject to U.S. income tax.

Who are the owners and beneficiaries of a foreign trust?

Please note that all references to “U.S. owners” and “U.S. beneficiaries” refer to persons who are considered U.S. residents for income tax purposes; i.e., either a U.S. citizen, a green card holder, or someone who meets the “substantial presence test” in any tax year. I. Tax residence of the trust: Foreign or domestic?