Foreign trusts are where some of the most expensive surprises in cross-border tax live. A trust quietly settled overseas — sometimes years before anyone in the family imagined moving to the United States — can trigger deemed realization events, punitive throwback taxes, and reporting obligations that catch families completely off guard.

In the final episode of Navigating the Expatriate Tax Maze, Peter Trieu of BDO walks through:

  • What actually makes a trust "foreign" in the eyes of the IRS (the control test and the court test)
  • The critical difference between foreign grantor trusts and foreign non-grantor trusts
  • How distributions to US beneficiaries are taxed — and why the throwback tax regime is so punishing
  • The 5-year rule that pulls pre-immigration trusts back into the US net
  • The deemed-sale trap when a foreign grantor trust converts to a non-grantor trust
  • Form 3520 and 3520-A reporting requirements every US beneficiary and grantor needs to know

A fitting close to the series — and a reminder that with foreign trusts, planning ahead is everything.

If anything in this series raised questions about your own situation or your employees', Dave Zydek and Peter Trieu welcome a direct conversation. Contact details and the full series are available at cawnetworkusa.com.

Brought to you by CAW Network USA in partnership with BDO.

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