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Identifying Foreign Trusts: Court and Control Tests, Grantor vs. Non-Grantor Trusts, Tax Consequences and Reporting Requirements

A live 110-minute CPE webinar with interactive Q&A

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Tuesday, July 15, 2025

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, June 20, 2025

or call 1-800-926-7926
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This webinar will walk international tax advisers through the multifaceted process of identifying foreign trusts. Our panel of global tax attorneys will explain the court and control tests, distinguish between grantor and non-grantor trusts, and discuss the income tax consequences of foreign trusts for owners, beneficiaries, and transferors.

Description

Determining whether an entity is a foreign trust is an analytical process that is not clear-cut. Deciding whether an entity is indeed a trust and then a foreign trust is complicated.

The definition of a trust under IRC § 301.7701-4 (a) states, "In general, the term "trust" as used in the Internal Revenue Code refers to an arrangement created either by a will or by an inter vivos declaration whereby trustees take title to property for the purpose of protecting or conserving it for the beneficiaries… ." The IRS clarifies that an entity created for business purposes and abusive trust arrangements or shams are not trusts for U.S. tax purposes.

To be considered a domestic trust, a trust must meet both a court test and a control test. Simply put, to satisfy the court test, a trust must be primarily supervised by U.S. courts. To satisfy the control test, a U.S. person must have the authority to control all substantial decisions of the trust. Determining what constitutes a U.S. person is another obstacle to overcome. Any trust that cannot satisfy these two requirements is considered a foreign trust.

The consequences of incorrect determinations regarding foreign trust status are severe. As outlined by the IRS: "A U.S owner may be subject to an initial penalty equal to the greater of $10,000 or 5% of the gross value of the portion of the trust's assets treated as owned by you at the close of the tax year, if a Form 3520-A or a substitute is not filed."

International tax practitioners working with multinational taxpayers need to thoroughly understand the criteria for deciding whether an entity is, in fact, a foreign trust.

Listen as our panel of highly skilled international tax attorneys reviews the steps for determining whether an entity is a foreign trust and discusses the significance of this classification.

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Outline

  1. Identify a foreign trust: court and control tests
  2. Specificities of grantor and non-grantor foreign trusts
  3. Income tax consequences to owners, beneficiaries, and transferors
  4. Reporting requirements

Benefits

The panel will discuss these and other critical matters:

  • Determine the nature of an entity (e.g., corporation vs. trust)
  • Determine the residency status of a trust (i.e., foreign vs. domestic)
  • Ascertain the type of trust (e.g., grantor or non-grantor)
  • Recognize the U.S. income tax consequences to U.S. and non-U.S. owners, grantors, trustees, and beneficiaries
  • Understand abusive foreign trust tax evasion schemes
  • Identify appropriate annual filings (e.g. Forms 1040NR, 3520, 3520-A, 8938)
  • Understand penalties associated with foreign trust filing requirements and recent developments

Faculty

Giordano-Lascari, Thomas
Thomas M. Giordano-Lascari
Partner
Greenberg Glusker Fields Claman & Machtinger

Mr. Giordano-Lascari is a Partner in the Private Client Services Group with nearly two decades of experience...  |  Read More

Silvain, Auberie
Auberie Silvain, Esq., LL.M.
Attorney
Greenberg Glusker Fields Claman & Machtinger

Ms. Silvain is an Associate in the Private Client Services Group, specializing in cross-border U.S. tax planning...  |  Read More

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Early Discount (through 06/20/25)

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