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