Naperville Estate Planning Lawyers Discusses Foreign Trusts

foreign trusts, Naperville estate planning lawyerIn today’s connected world, more people that ever before have begun participating in a global economy. Having family members living and working both in the United States as well as overseas often brings with it a number of issues when you are deciding what will happen to your estate upon your death. As an experienced estate planning attorney, I understand the need to prepare for a variety of scenarios, including the possibility that one or more of your heirs will be living abroad when the time comes to distribute your estate.

Generally speaking, the tax policy of the United States was created and continues to be handled in such a way that that the income an individual receives while living and working in the U.S. is equitably taxed. Sometimes, however, an individual must consider foreign taxes and estate planning policies as well. There are also domestic guidelines that may apply when working under foreign estate law.

Foreign Trusts

One of the situations that may bring about such interplay between U.S. law and that of another country occurs when an individual establishes a foreign trust. Foreign trusts are simply trusts that are ruled by the laws of another country. Contrary to popular belief, the ability to hold a foreign trust is not reserved for the ultra-wealthy or those who partake in shady dealings. There are legitimate reasons to hold a foreign trust, especially if you have business or financial interests in another country.

Benefits of a Foreign Trust

Foreign trusts are typically established to increase flexibility in trust provisions and retain more benefit and control over a trust. For example, many foreign jurisdictions have statutes of limitations that are favorable to debtors and even more favorable spendthrift provisions.

Foreign trusts also provide certain asset protections against creditors. In some situations, creditors may be more likely to settle a claim rather than pursue litigation in a foreign country. Litigating extraterritorially can be very expensive and may not result in a judgment that can actually be enforced. Claims on property might also be protected from other claimants, such as those related matrimonial disputes.

Reporting Requirements

The IRS has established a number of reporting requirements on those who have established a foreign trust. Owners and beneficiaries of foreign trusts have to notify the government of certain events, such as when money or property is transferred to the trust in connection with a “reportable event.” The fines for failing to comply with the reporting requirements are hefty, and an attorney can help you understand the risks involved.

Get the Direction You Need

If you have questions about foreign trusts and how they may be used to protect your assets, contact an experienced Naperville estate planning attorney. Call 630-756-1160 for a confidential consultation at The Gierach Law Firm. We will help you explore your available options and work with you in making the best decisions for yourself and your family.

 

Sources:

Forbes

Internal Revenue Service