Assets Held by Revocable Trust

Some Alternative Methods for Foreign Investor to Take Title to U.S. Residential Real Property

BENEFITS AND BURDENS OF SOME
ALTERNATIVE METHODS FOR A FOREIGN INVESTOR TO TAKE TITLE TO
U.S. RESIDENTIAL REAL PROPERTY
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CA Residential Real Property held by REVOCABLE TRUST – governed under California law, with Non-U.S. Citizen Residing Abroad, as Grantor

BENEFITS

Disposition of Assets.

(a) The trust is typically created primarily for the benefit of the grantor during his or her life and provides for the orderly disposition of assets upon death of grantor.

(b) During the lifetime of the grantor, grantor can revoke the trust in whole or in part.

(c) Ability to appoint trust protector to protect client’s interest in the event of their incapacity.

(d) Upon death of grantor, the Foreign Trust can be domesticated (the “Domesticated Trust”) whereas U.S. trustees are appointed over assets held for benefit of U.S. beneficiaries. The Domesticated Trust will be treated as a domestic trust pursuant to Section 7701(a)(30)(E) of the U.S. Internal Revenue Code, by which it satisfied the two tests: (1) a court within the United States is able to exercise primary supervision over the administration of the trust (the “court test”); and (2) one or more U.S. fiduciaries have the authority to control all substantial trust decisions (the “control test”).

BURDENS

• U.S. Gift Tax, U.S. Estate Tax, Anonymity and Liability. Same as if U.S. Real Property was held directly by Foreign Individual (see Item No. 1).