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Foreign Trust Transition Planning: Distributions to Beneficiaries, Trust Restructuring, Reporting Requirements

Grantor to Nongrantor Trust Tax Implications, DNI, Accumulation of Trust Income, Throwback Tax, Planning Techniques

Note: CPE credit is not offered on this program

Recording of a 90-minute CLE webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, October 13, 2020

Recorded event now available

or call 1-800-926-7926

This CLE course will provide guidance to estate planners on overcoming the challenges of foreign trust transition planning. The panel will discuss complex tax rules and reporting obligations, the pros and cons of foreign grantor vs. nongrantor trusts, distributions to U.S. and foreign beneficiaries, trust restructuring, and other key considerations for estate planners.


The use of foreign trusts requires estate planners to implement planning to optimize tax strategies. Estate planners and advisers must consider the present and future impact of U.S. tax rules on the transition of a foreign grantor trust to a nongrantor trust.

Generally, U.S. tax law disallows foreign individuals from being grantors of trusts with U.S. beneficiaries unless an exception applies under Section 672(f). A foreign trust with U.S. beneficiaries will be considered a foreign grantor trust if (1) the grantor has the power to revoke the trust, (2) the grantor or the spouse of the grantor are the sole beneficiaries during the grantor's life, and (3) the trust was created on or before September 1995. Being considered a foreign grantor trust for U.S. tax purposes reduces potential income taxes and diminishes reporting requirements.

On the other hand, accumulated income from a foreign nongrantor trust is considered distributable net income (DNI), which is taxable upon distribution to U.S. beneficiaries as ordinary income or capital gains. Advanced knowledge of these tax rules is critical because foreign grantor trusts default to foreign nongrantor trusts upon the death of the grantor resulting in adverse U.S. tax implications that can only be avoided with effective planning.

Listen as our panel discusses the complex tax rules and reporting obligations of foreign trusts, tax pitfalls to avoid, trust restructuring options, and other key considerations for estate planners.



  1. Overview of U.S. tax treatment of foreign trusts
  2. Trust transition planning options and challenges
    1. Distributions to U.S. beneficiaries
    2. Distributions to foreign beneficiaries
    3. Trust restructuring
  3. Best practices and common issues for estate planners and advisers


The panel will review these and other key issues:

  • What are the pros and cons of foreign grantor vs. nongrantor trusts?
  • What are the U.S. tax implications for foreign trusts with U.S. beneficiaries?
  • What are the key considerations and options for trust restructuring to minimize the tax liability of foreign trusts?
  • What are some planning techniques available to avoid adverse U.S. tax implications for transition of the foreign grantor to nongrantor trusts?


Brister, Jack
Jack R. Brister, TEP

Managing Member
International Wealth Tax Advisors

Mr. Brister specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset...  |  Read More

Millhouse, Jack
Jack C. Millhouse, CPA, JD

International Tax Senior Manager

Mr. Millhouse is a Senior Manager in FGMK’s Specialty Tax Practice. He is an attorney with over 10 years of...  |  Read More

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