Offshore Trusts Have no Tax Costs
What are the Tax Consequences of the Offshore Trust?
The offshore asset protection trust is tax neutral. That means your U.S. income, estate and gift tax liabilities remain unchanged. A U.S. person who establishes an offshore trust is still required to pay income taxes on all of the income of the trust on their annual Form 1040 income tax returns. There are several IRS information returns required if you establish a foreign trust. Forms 3520 and 3520-A have to be filed annually disclosing certain aspects of the offshore trust. Additionally, if the trust has a foreign bank, brokerage or other financial account or investment for which the aggregate value exceeds $10,000 at any time during the calendar year, then Treasury Department Form TD F 90-22.1 is due annually with respect to such accounts. There can be significant penalties imposed if these forms are not timely filed. Accordingly, it is very important to make sure that your CPA prepares these reports and that they are timely filed. The offshore trust is established in a tax-free jurisdiction so there are no foreign taxes applicable to the trust.
What is Asset Protection?
Limited Partnerships / Limited Liability Companies
Offshore Asset Protection Trusts