You’re the beneficiary of a family trust. How should you report it? And how much will it cost you?

1. If you are the beneficiary of a non-U.S. trust and there are no other U.S. grantors/settlors, (trust owners) then the IRS considers you a U.S. owner of the foreign grantor trust. As such, you are required to report trust ownership annually using Form 3520-A (the cost to have this form filed is $350).
2. If you received distributions from a foreign trust over the course of the past year, then you also have to file Form 3520 (the cost to have this form filed is $200).
3. If you are a beneficiary of a foreign trust but the trust has another U.S. grantor/settlor, then only the grantor/settlor is obligated to file Form 3520-A. However, you must file Form 3520 for each year that you receive distributions from the trust.
4. If there are multiple U.S. beneficiaries, then only one copy of the form needs to be filed. However, each U.S. beneficiary is responsible for ensuring that Form 3520-A is filed on behalf of the trust. If you are not the person filing the Form 3520-A, then you should obtain a copy in order to be sure that the form has been filed.