Howard Rosen discusses the tax consequences of implementing an offshore trust.
Usually articles and studies concerning offshore trusts have focused on their use for asset protection. However another, very important, use of a certain type of offshore trust, is to effect estate tax savings. This can be accomplished by ‘freezing’ the value of trust assets vis-a-vis the settlor’s estate at current values. Result? Any future growth in asset values will escape US federal estate taxation, thus increasing the amounts received by children and other beneficiaries. A variation of this technique can also be used for non-resident aliens owning US real estate, or those wishing to immigrate to the United States, to practically eliminate any US estate tax on death.
Most issues of the APN dealing with offshore trusts have focused on the use of such trusts for asset protection. Another, very important, use of a certain type of offshore trust is to effect an estate tax savings. This is accomplished by “freezing” the value of trust assets vis-a-vis the settlor’s estate at current values.