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Dianne Mehany Examines Trust Distributions to Foreign Beneficiaries on Strafford Webinar

February 27, 2018, 1:00 PM ET - 2:50 PM ET / 10:00 AM PT - 11:50 AM PT
Panelist:Dianne C. Mehany
Program:Trust Distributions to Foreign Beneficiaries: Complex Planning and Calculation Challenges
Event Sponsor:Strafford
Registration:Click Here To Register

This webinar will provide estate and trust tax advisers and compliance professionals with a thorough and practical guide to the tax compliance issues that fiduciaries face before making or allocating U.S. domestic trust or estate distributions to foreign beneficiaries. The panel will explain how to determine the U.S. status of foreign beneficiaries for U.S. tax purposes, detail how to calculate required withholding tax and net distribution amounts, discuss DNI implications of foreign beneficiaries, and explore the application common tax treaty benefits.


Among the most complex tasks for fiduciaries and their tax advisers is distribution planning for domestic trusts with foreign and nonresident alien beneficiaries. The presence of a non-U.S. person as a beneficiary complicates trust status and imposes significant additional duties on executors and fiduciaries, and tax advisers should be well-versed in the differences in treatment between trusts with foreign beneficiaries as opposed to all domestic beneficiaries.

Merely having a foreign beneficiary changes a simple trust to a complex trust, and adds layers of withholding and compliance requirements to complex trusts with discretionary power over distributions. Fiduciaries must determine the tax status of beneficiaries prior to planning distributions to avoid serious tax issues for the trust and the beneficiaries.

Complicating matters further for tax advisers is exploring whether a foreign beneficiary may avail himself of a treaty provision that would alter the income tax treatment of any planed distribution. Depending on the nature of the trust income available for distribution and various treaty provisions, some income may be treated differently when allocated or distributed to a foreign beneficiary than it would to a U.S. person. Withholding requirements on income paid to foreign persons create yet another tax trap for fiduciaries and their advisers.

Listen as our experienced panel provides a thorough and practical guide to distribution planning involving trusts with foreign beneficiaries.


  1. Simple trusts with foreign beneficiaries
  2. Withholding requirements for trusts allocating distributions to foreign beneficiaries
  3. Impact of tax treaty provisions on trusts with non-U.S. beneficiaries
  4. Additional tax reporting requirements for trusts and foreign beneficiaries
  5. Critical components of distribution planning
  6. Impact foreign beneficiaries may have on DNI calculations


The panel will discuss these and other critical questions:

  • What must fiduciaries and their tax advisers know to verify the tax status of foreign or “non-U.S.” beneficiaries?
  • What are the withholding requirements on distributions, either actual or allocated, to foreign beneficiaries?
  • What are the reporting requirements for both the trust and its foreign beneficiaries on trust distributions?
  • What impact do tax treaties have on calculation of net distributable amounts?
  • What income items must be treated differently for fiduciary accounting income and DNI calculation purposes when a trust has a non-U.S. person as a beneficiary?

Learning Objectives

After completing this course, you will be able to:

  • Indicate the tests for verifying when a U.S. trust has a non-U.S. person as a beneficiary
  • Identify the tax withholding and reporting requirements for U.S. trusts with foreign beneficiaries
  • Distinguish the differences in fiduciary accounting income calculations between trusts with foreign beneficiaries and trusts with all U.S. person beneficiaries
  • Recognize the impact of foreign beneficiaries on trust DNI calculations
  • Determine how tax treaties can affect computation of net distributable income to foreign beneficiaries

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