Many foreign funds are not even listed in the US due to the difficulty in dealing with the compliance needs for United States investors. A foreign trust is another vehicle which can be used for a variety of reasons. Welcome to the world of stiftungs, anstalts, hybrids and asset protection legislation. While foreign trusts do solve some concerns for the United States investor, they rarely provide tax deferral. A transfer is subject to these new rules if made directly or indirectly, or due to death.
Some exceptions apply, including charitable transfers or pension transfers.
If the trust is established by a United States citizen, annual returns must be filed. The disclosures now required by the trust under the Act have been substantially increased. A United States agent for the trust must be identified whenever there is a United States beneficiary. Otherwise the IRS can treat any distribution from the trust as income. Many foreign nationals have established offshore grantor trusts for United Scares beneficiaries.