The Foreign Account Tax Compliance Act (FATCA) is in full swing. Non-US financial institutions have completed reporting of US account holders for tax year 2014 and will soon begin compiling for their 2015 FATCA reports. Just as international families and their advisers are getting used to myriad requests for FATCA Form W-8 certification forms, more than 90 other countries have indicated that they wish to address tax evasion through a global exchange of financial information by implementing the Common Reporting (CRS) which, like FATCA, will affect non-US trusts and their trustees.
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Today’s PFTCs bear little resemblance to ‘private trust companies’ of the 1990s, the gestation era for the PFTC. The modern US PFTC also differs markedly from a third form of ‘private trust company’: its ‘offshore’ single family private trust company (OFTC). Limited federal taxation of foreign trusts and privacy protections as good as or better than those found in traditional offshore jurisdictions have led some commentators to call the United States the ‘new offshore’ jurisdiction for trusts.
Most family offices that serve U.S. families are well aware that special planning considerations can arise when a U.S. citizen family member marries a noncitizen. Should the client’s estate plan be revised to incorporate a qualified domestic trust (QDOT) to ensure that assets passing to the surviving noncitizen spouse qualify for federal estate tax marital deduction?
In early April 2016 files leaked from a large Panama-based law firm (known as the ‘Panama Papers’) brought to the attention of many the ways in which offshore companies and structures can be used to obscure the identity of beneficial owners, some of whom have used such entities to avoid paying tax in their country of tax residence.
Even though a trust may be established under the laws of a US state and have a US trust company serving as trustee (hereinafter a ‘US-based trust’), this does not mean that it is a US domestic trust for income tax purposes. If non-US persons make substantial decisions for the trust, the US-based trust will be classified as a foreign trust under US tax law. Regardless of whether the US-based trust is foreign or domestic, if it has accounts with financial institutions, it must provide certification of its status for Foreign Account Tax Compliance Act (FATCA) purposes.
In 2015 charitable giving rose to $373 billion in the United States, driven by an almost $10 billion increase in gifts from individuals which represent over 70% of total giving. This year individual giving in the U.S. is poised for even greater growth, thanks to several contributing factors, including a solid economy and robust stock market performance, the extension of the IRA Charitable Rollover provision and the continuing value of itemized charitable tax deductions. Regardless of the election results, there are four reasons why 2016 is shaping up to be a great year to give.
By enacting progressive trust laws building on the uniform trust code, Tennessee is attracting a growing number of family offices that are seeking flexibility to adapt to changes in family circumstances and the world around them. One such change was adding the "common sense" provision that expanded the definition of "family member" or family client who may be served by a private family trust company.
Significant tax reform is likely on the horizon. Given the proposals from President-elect Trump and the Republicans in Congress, we may see legislation repealing the current estate tax passed in 2017, and potentially changes to the gift and generation skipping transfer (GST) tax rules. There is a global precedent for the removal of an estate tax, and Canada serves as one example of what the proposed tax reform may look like in the U.S., which could mean the implementation of a new capital gains tax at death. The uncertainty regarding the future of tax law in the U.S.
Although the future is unpredictable, we do know that financial planning can allow families and their advisors to operate from a position of strength and resilience, no matter the changes that lie ahead. In this video, the Baird economic analysts and financial planning specialists look at how the economic landscape impact your finances in 2021 while highlighting wealth planning opportunities to consider.
Investors shouldn't let taxes prevent them from choosing better investment options. Transitioning to a tax-managed SMA may help minimize upfront tax cost and provide opportunities over time to reduce tracking error against a preferred benchmark. The combination of this tax efficiency, along with ongoing tax management, allows investors with different tax and investment situations to more readily achieve their near-term and long-term asset allocation and investment goals.