Estate Planning Purposes

A stand alone purpose for the use of a foreign trust would be as part of an estate plan. Unlike the taxation treatment of a Settor upon transfer of property to a foreign trust as required by Section 679 of the Code, (1) a Foreign Trust is exempt from the provisions. A transfer of assets by a United States decedent by virtue of the provisions of his or her testamentary disposition, Last Will and Testament or a Living Trust that is the receptacle of a Last Will and Testament (a pour-over Will) is except from this tax treatment. (2)

To illustrate the use of such a foreign trust, the following hypothetical can be a guide to understand its use: Read More