Basics of a Foreign Non-Grantor Trust & US Beneficiary

A Foreign Non-Grantor Trust is basically a foreign trust that was set up by a foreign person/non-US grantor or settler. And it is possible for a US beneficiary, of that trust, to be taxed, even though they did not receive a distribution.
Usually, when you have a Foreign Non-Grantor Trust with a US beneficiary, that beneficiary doesn’t have to pay tax, until/unless they receive a distribution. And because non-distributed assets remain in the name of (owned by) the trustee/trust, the US beneficiary does not have to pay taxes on them. Now, when those assets generate income, tax obligations (income tax) are applied. Additionally, because the assets remain in the name of the trustee when the US beneficiary passes on the assets to their heirs, they will not be taxed (US estate gift tax) on the assets either.
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Jimmy Sexton, LL.M. is the Founder & CEO of Esquire Group. Jimmy founded Esquire Group with the objective of helping and inspiring wealthy families, investors, entrepreneurs, and high-level executives obtain and gain control over and protect their wealth, via strategic wealth planning. Jimmy started his career in 2003 and continues to service an elite group of clients. In 2005 Jimmy extended services to include tax preparation, which has evolved into Esquire Group’s exclusive Concierge Tax Service.
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[@robertcarr272]

Why would not the foreign parents be the foreign grantor/settlor/trustor for the US PERSON beneficiary?

[@esquiregroup]

This is possible and quite typical.

[@robertcarr272]

So... the issue appears to be 'US INCOME' or 'INCOME' distributed to a 'US BENEFICIARY'... yes?

[@esquiregroup]

Yes, this is a key issue, but the U.S. taxation of foreign trusts is quite complex. If you’d like to discuss, please schedule a consultation with me by emailing us at [e-mail]. Thanks!

[@robertcarr272]

BTW, whom is the elusive trustee in your scenario?

[@esquiregroup]

Depends. It can be either a professional trustee or a private trust company managed by the family setup by the trust.

[@robertcarr272]

Whom or who is the 'Foreign situs trust'?

[@esquiregroup]

I don’t understand the question?

[@Reinheit]

26 CFR § 1.402(c)-1

[@naturalearththreepointthre2553]

Would like to pick your brain, do you have a email

[@esquiregroup]

[e-mail]