{"id":1530,"date":"2023-05-24T00:00:00","date_gmt":"2023-05-24T00:00:00","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-asia\/2023\/05\/24\/possible-cross-border-trusts-to-consider-for-us-or-canadian-beneficiaries\/"},"modified":"2024-08-29T15:54:26","modified_gmt":"2024-08-29T19:54:26","slug":"possible-cross-border-trusts-to-consider-for-us-or-canadian-beneficiaries","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-asia\/insights\/possible-cross-border-trusts-to-consider-for-us-or-canadian-beneficiaries","title":{"rendered":"Possible cross-border trusts to consider for U.S. or Canadian beneficiaries"},"content":{"rendered":"\n<p>Enterprising global families are increasingly looking beyond their homeland&#8217;s borders in search of more opportunities to build and protect their wealth and legacy. According to the<span>&nbsp;<\/span><a href=\"https:\/\/www.knightfrank.com\/research\/article\/2023-03-01-how-are-uhnwis-creating-wealth\" target=\"_blank\" rel=\"noopener\" class=\"link-ext\">2023 Wealth Report <\/a><span>&nbsp;<\/span>by Knight Frank, investments by ultra-high-net-worth individuals (UHNWIs) are progressively more diverse \u2013 both by geography and asset class, devoting over a fifth of their investable wealth in commercial property and in assets overseas.<\/p>\n\n\n\n<p>But holding international assets may complicate generational wealth transfer as tax and estate planning become complex across borders. However, some of the complexities that arise from cross-border wealth transfers may be mitigated using trust structures.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-is-a-trust-structured\">How is a trust structured?<\/h2>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1380\" height=\"800\" src=\"https:\/\/www.rbcwealthmanagement.com\/en-asia\/wp-content\/uploads\/sites\/8\/2023\/05\/trust-company-as-trustee-flow-chart-en-2.jpg\" alt=\"A flow chart depicting how a trust is structured.\" class=\"wp-image-13391\" srcset=\"https:\/\/www.rbcwealthmanagement.com\/en-asia\/wp-content\/uploads\/sites\/8\/2023\/05\/trust-company-as-trustee-flow-chart-en-2.jpg 1380w, https:\/\/www.rbcwealthmanagement.com\/en-asia\/wp-content\/uploads\/sites\/8\/2023\/05\/trust-company-as-trustee-flow-chart-en-2.jpg?resize=300,174 300w, https:\/\/www.rbcwealthmanagement.com\/en-asia\/wp-content\/uploads\/sites\/8\/2023\/05\/trust-company-as-trustee-flow-chart-en-2.jpg?resize=768,445 768w, https:\/\/www.rbcwealthmanagement.com\/en-asia\/wp-content\/uploads\/sites\/8\/2023\/05\/trust-company-as-trustee-flow-chart-en-2.jpg?resize=1024,594 1024w\" sizes=\"auto, (max-width: 1380px) 100vw, 1380px\" \/><\/figure>\n\n\n\n<p>A trust is a legal relationship created when the settlor or grantor transfers ownership of certain assets to a trustee, which can be another person or a company. These assets are held by the trustee for the benefit of beneficiaries. The trustee has a fiduciary duty to manage and administer trust assets in the best interests of the beneficiaries.<\/p>\n\n\n\n<p>Non-residents in the<span>&nbsp;<\/span><a href=\"https:\/\/www.irs.gov\/individuals\/international-taxpayers\/classification-of-taxpayers-for-us-tax-purposes\" target=\"_blank\" rel=\"noopener\" class=\"link-ext\">U.S. <\/a><span>&nbsp;<\/span>or<span>&nbsp;<\/span><a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/international-non-residents\/individuals-leaving-entering-canada-non-residents\/non-residents-canada.html\" target=\"_blank\" rel=\"noopener\" class=\"link-ext\">Canada <\/a><span>&nbsp;<\/span>who have beneficiaries that live in those countries have access to trust structures such as a Foreign Grantor Trust (U.S.) and a Granny Trust (Canada), which may help your heirs preserve family wealth for future generations.<\/p>\n\n\n\n<figure class=\"wp-block-rbcwm-table\"><table class=\"table-transparent table table-striped table-primary\"><thead><tr><th><\/th><th><strong>Granny Trust for Canadian beneficiaries<\/strong><\/th><th><strong>Foreign Grantor Trust (FGT) for U.S. beneficiaries<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>What is it?<\/strong><\/td><td>A trust structure established by a non-Canadian resident settlor to benefit Canadian residents as beneficiaries.<\/td><td>A trust established by a non-U.S. person for the benefit of U.S. beneficiaries.<\/td><\/tr><tr><td><strong>Who is it for?<\/strong><\/td><td>Non-Canadian residents who have beneficiaries who are Canadian residents.<\/td><td>Non-U.S. residents who have beneficiaries who are U.S. residents.<\/td><\/tr><tr><td><strong>Features<\/strong><\/td><td>\u2022 Trust can provide for both Canadian and non-Canadian resident beneficiaries.<br><br>\u2022 The settlor(s) should be the only asset contributor(s) of the Granny Trust.<br><br>\u2022 No person who is a Canadian tax resident can transfer assets to the trust.<\/td><td>\u2022 FGT is generally classified where the grantor directly or indirectly transfers assets to the trust but retains certain powers over the income or capital of the trust.<br><br>\u2022 FGT generally only lasts for the lifetime of the grantor. When the grantor passes away, the FGT becomes a foreign non-grantor trust.<\/td><\/tr><tr><td><strong>Purpose<\/strong><\/td><td>Estate planning tool that provides for Canadian resident descendants and serves to preserve family wealth.<\/td><td>Estate planning tool for non-U.S. person to benefit U.S. beneficiaries for non-U.S. trust assets.<\/td><\/tr><tr><td><strong>Example<\/strong><\/td><td>Mr. A is a Chinese resident who has just retired. He is looking to pass his assets to his children ahead of time. His son is in China, taking care of his business, while his daughter is married to a Canadian and is living in Toronto. A Granny Trust may be a suitable structure that can cater to both his son and his daughter&#8217;s tax residence statuses.<\/td><td>Mrs. A is a businesswoman in Singapore. Her two children studied in the U.S. when they were young and both decided to continue to reside in the U.S. after graduation. She intends to pass the wealth accumulated from her business to her children through a Foreign Grantor Trust.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-managing-your-family-s-global-interests\">Managing your family&#8217;s global interests<\/h2>\n\n\n\n<p>When it comes to managing wealth across borders, you \u2013 and a wealth advisor familiar with your circumstances \u2013 should consider both onshore and offshore implications.<\/p>\n\n\n\n<p>It is important to remember that adding new jurisdictions to a transaction means dealing with multiple sets of laws. Jurisdictions will consider different factors such as the law of domicile (where the settlor or grantor lived), where the assets are located and where the beneficiaries reside. What this may mean is that the assets in your estate may be taxed by the government, including assets located in a different jurisdiction, which may mean less for your beneficiaries.<\/p>\n\n\n\n<p>Working with a global bank and advisors who understand the nuances of the international nature of your family may help smooth out the process to support legacy protection.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Granny Trust or a Foreign Grantor Trust may be considered among other estate planning tools when facing complexities arising from cross-border wealth transfers.<\/p>\n","protected":false},"author":144,"featured_media":1534,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"rbcwm_post_date":"","editor_notices":[],"rbc_url_alias":"","rbcwm_featured_desktop_image_position":"","rbcwm_featured_mobile_image_position":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[79],"tags":[80,305],"rbcwm_content_owner":[],"rbcwm_need":[209,210],"rbcwm_segment":[205,206],"rbcwm_solution":[220,208],"rbcwm_topic":[204],"rbcwm_channel":[],"rbcwm_format":[],"class_list":["post-1530","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-estate-planning","tag-estate-planning","tag-trust-structure","rbcwm_need-grow","rbcwm_need-protect","rbcwm_segment-business-owners-and-entrepreneurs","rbcwm_segment-individuals-and-families","rbcwm_solution-trusts","rbcwm_solution-wealth-planning","rbcwm_topic-education"],"acf":{"rbcwm_subtitle":"A Granny Trust or a Foreign Grantor Trust may be considered among other estate planning tools when facing complexities arising from cross-border wealth transfers.","rbcwm_post_author":"","rbcwm_custom_breadcrumb_text":"","rbcwm_custom_breadcrumb_link_url":"","rbcwm_disclaimers":{"add_disclosures":"","perspective_disclaimer":"","expandable":"","omit_from_pages":[],"disclaimer_footnote":"The material herein is for information purposes only and only meant for the intended recipient. 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