June 02, 2020

Help – My Exclusively Foreign Trust Now Has a U.S. beneficiary! What Are the Issues a Trustee Will Now Face in 2020?

June 02, 2020/ Ruchelman P.L.L.C.

For many wealthy families based in Europe, elegant private client planning is performed to high European standards. Then, one or more of the heirs moves to the U.S. What should be done to keep the family assets away from U.S. income tax and future estate tax? Good answers are not easy to come by, especially when the adviser suggests disqualifying the U.S. beneficiary from trust benefits. Surely, there must be a better way. There is, and in her article, Nina Krauthamer explores the issues and possible solutions to the ultimate conundrum.

July 30, 2018

Have You Inherited a P.F.I.C.? – What it Means to Be a U.S. Beneficiary

July 30, 2018/ Ruchelman P.L.L.C.

In today’s global environment, it is not surprising to find that a beneficiary of a foreign estate or trust is living in the U.S. An interest in a foreign trust can be problematic for the beneficiary if the foreign trust invests through a foreign “blocker” corporation that holds passive assets (such as publicly traded stocks and securities) or a foreign mutual fund. These companies can stumble into P.F.I.C. categorization for U.S. tax purposes, which yields sub-optimal tax consequences for the U.S. beneficiary. Rusudan Shervashidze and Nina Krauthamer break down the U.S. tax rules that make a foreign corporation a P.F.I.C., the various ways in which a U.S. investor in a P.F.I.C. will be taxed, and the reporting obligations that are imposed on the U.S. investor in a P.F.I.C.