專業叢書
Estate Planning by U.S. Trust 美國報稅與海外財產揭露（英文部分）
Appendices
Section D: U.S. Domestic Trust VS. Foreign Trust – “Court Test” & “Control Test”
While both U.S. domestic trusts and U.S. foreign trusts can be settled in the U.S., U.S. domestic trusts are generally preferred for Wealth Creators wishing to settle trusts for U.S. beneficiaries.
U.S. Domestic Trust
Under 26 U.S.C.§ 7701(a)(30)(E) and (31)(B), a trust must meet both the “court test” and the “control test” to be considered as a U.S. trust:
(i) A court within the United States is able to exercise primary supervision over the administration of the trust (court test); and
(ii) One or more United States persons have the authority to control all substantial decisions of the trust (control test).1
1 26 U.S.C. § 7701 (a)(30)(E) (“the term ‘United Person’ means any trust if: (i) a court within the United States is able to exercise primary supervision over the administration of the trust; and (ii) one or more United States persons have the authority to control all substantial decisions of the trust.”)
26 CFR § 301.7701-7 (c)(3)(ii).
Court Test
Under 26 CFR § 301.7701-7, the term the United States is used in this section in a geographical sense. Thus, for the purposes of the court test, the United States includes only the States and the District of Columbia. A trust is a U.S. domestic trust if it is administered solely within the U.S., has no provisions directing administration outside the U.S., and has no automatic migration provisions.
Control Test
One or more U.S. persons must have the authority, by vote or otherwise, to make all “substantial decisions” of the trust with no other person having veto power.
According to 26 CFR § 301.7701-7, substantial decisions include, but are not limited to, decisions concerning:
Whether and when to distribute income or corpus;
The amount of any distributions;
The selection of a beneficiary;
In the event of an inadvertent change in any person that has the power to make a substantial decision of the trust that would cause the domestic or foreign residency of the trust to change, the trust is allowed 12 months from the date of the change to make necessary changes either with respect to the persons who control the substantial decisions or with respect to the residence of such persons to avoid a change in the trust’s residency. For the purposes of this section, an inadvertent change means death, incapacity, resignation, change in residency or other change with respect to a person that has a power to make a substantial decision of the trust that would cause a change to the residency of the trust but that was not intended to change the residency of the trust. If the change is made within 12 months, the trust will remain as a U.S. trust. Conversely, if no change is made, the trust will become a foreign trust after the term is expired.2
Foreign Trust
The term “foreign trust” means any trust other than a trust described in 26 U.S.C. §7701(a)(30)(E).3 In other words, a foreign trust does not meet the court test and / or the control test.
2 26 CFR § 301.7701-7 (d)(2)(i).
3 26 U.S.C. § 7701 (a)(31)(B) (Foreign Trust) (“the term ‘foreign trust’ means any trust other than a trust described in subparagraph (E) of paragraph (30).”).
U.S. Domestic Trust
Under 26 U.S.C.§ 7701(a)(30)(E) and (31)(B), a trust must meet both the “court test” and the “control test” to be considered as a U.S. trust:
(i) A court within the United States is able to exercise primary supervision over the administration of the trust (court test); and
(ii) One or more United States persons have the authority to control all substantial decisions of the trust (control test).1
1 26 U.S.C. § 7701 (a)(30)(E) (“the term ‘United Person’ means any trust if: (i) a court within the United States is able to exercise primary supervision over the administration of the trust; and (ii) one or more United States persons have the authority to control all substantial decisions of the trust.”)
26 CFR § 301.7701-7 (c)(3)(ii).
Court Test
Under 26 CFR § 301.7701-7, the term the United States is used in this section in a geographical sense. Thus, for the purposes of the court test, the United States includes only the States and the District of Columbia. A trust is a U.S. domestic trust if it is administered solely within the U.S., has no provisions directing administration outside the U.S., and has no automatic migration provisions.
Control Test
One or more U.S. persons must have the authority, by vote or otherwise, to make all “substantial decisions” of the trust with no other person having veto power.
According to 26 CFR § 301.7701-7, substantial decisions include, but are not limited to, decisions concerning:
Whether and when to distribute income or corpus;
The amount of any distributions;
The selection of a beneficiary;
- Whether a receipt is allocable to income or principal;
- Whether to terminate the trust;
- Whether to compromise, arbitrate, or abandon claims of the trust;
- Whether to sue on behalf of the trust or to defend suits against the trust;
- Whether to remove, add, or replace a trustee;
- Whether to appoint a successor trustee to succeed a trustee who has died, resigned, or otherwise ceased to act as a trustee, even if the power to make such a decision is not accompanied by an unrestricted power to remove a trustee, unless the power to make such a decision is limited such that it cannot be exercised in a manner that would change the trust’s residency from foreign to domestic, or vice versa; and
- Investment decisions; however, if a United States person under section 7701(a)(30) hires an investment advisor for the trust, investment decisions made by the investment advisor will be considered substantial decisions controlled by the United States person if the United States person can terminate the investment advisor’s power to make investment decisions at will.
In the event of an inadvertent change in any person that has the power to make a substantial decision of the trust that would cause the domestic or foreign residency of the trust to change, the trust is allowed 12 months from the date of the change to make necessary changes either with respect to the persons who control the substantial decisions or with respect to the residence of such persons to avoid a change in the trust’s residency. For the purposes of this section, an inadvertent change means death, incapacity, resignation, change in residency or other change with respect to a person that has a power to make a substantial decision of the trust that would cause a change to the residency of the trust but that was not intended to change the residency of the trust. If the change is made within 12 months, the trust will remain as a U.S. trust. Conversely, if no change is made, the trust will become a foreign trust after the term is expired.2
Foreign Trust
The term “foreign trust” means any trust other than a trust described in 26 U.S.C. §7701(a)(30)(E).3 In other words, a foreign trust does not meet the court test and / or the control test.
2 26 CFR § 301.7701-7 (d)(2)(i).
3 26 U.S.C. § 7701 (a)(31)(B) (Foreign Trust) (“the term ‘foreign trust’ means any trust other than a trust described in subparagraph (E) of paragraph (30).”).
