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Managing Domesticated Former Foreign TrustsManaging Domesticated Former Foreign Trusts

Strategies to mitigate accumulation distributions of UNI.

Melvin A. Warshaw

October 21, 2024

22 Min Read
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For several decades, there have been strong U.S. tax reasons to keep a foreign trust offshore so that there’s reduced tax friction on the current earnings of the trust, thereby enhancing overall family wealth outside the U.S. tax net. Unfortunately, both U.S. practitioners and beneficiaries tend to underestimate the magnitude of compounded tax savings available offshore, leading them to erroneously assume that once accumulated offshore, tax-efficient access to wealth becomes unattainable.

However, if certain longstanding, time-limited foreign trusts continue onshore after accumulating income for eventual distribution to U.S. beneficiaries, the trustee will face serious problems. Let’s explore a few strategies to mitigate this dilemma. 

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About the Author

Melvin A. Warshaw

Melvin A. Warshaw, Esq. is an international cross-border tax and private client lawyer based in Massachusetts. He is an ACTEC Fellow, an Academician of the International Academy of Estate and Trust Law and a member of the International Practice committee of the editorial board of Trusts and Estates.