Foreign Trust Tax Consequences

Chris K. Gawart (attorney, Milwaukee, WI & Phoenix, AZ), Amalia L. Todryk (attorney, Milwaukee, WI), and Adam W. Kiracofe (attorney, Milwaukee, WI) recently published their article entitled Beware the Foreign Trust Tax Trap, 24 Prob. & Prop. 40 (Sept./Oct. 2010).  An excerpt from the introduction is below:

To avoid unwittingly creating a foreign trust, a practitioner must know how to determine whether a trust is domestic or foreign. In this article the authors set out the applicable tests used to determine whether a trust is a foreign trust. The authors also discuss possible remedies for curing a situation in which a formerly domestic trust unintentionally becomes a foreign trust, discuss the income tax consequences and filing requirements of a foreign trust, and offer possible drafting solutions to prevent a trust from becoming a foreign trust either on its creation or during its administration.