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TL; DR - Transcript:

Hi, guys, Peter Harper, the managing director and CEO of Asena Advisors. For those of you that are not familiar with, the business we're a multifamily office and we advise foreign families and individuals on US-based direct investment and mergers and acquisitions.

So the start of the year, we're always talking to our clients about prospective investments, prospective deals, and we're looking at these structures to ensure that there are no impediments or negative parts of their structure that could create an adverse outcome from a tax perspective. A part of our practices are substantially oriented to an Australian client base within Australia. There is a very heavy focus around utilizing forms of discretionary trusts as investment vehicles. And these forms of trust are also quite similar to the forms of trust that you would see in most offshore locations the Cayman Islands, BVI, Cook Islands, Nevis, that they have very similar structures, trustee, appointed protector, discretionary beneficiaries and a fair bit of flexibility for the trustee to determine how income gains and investments are made.

These factors are very important because the US has a set of anti avoidance rules that can can look through foreign and domestic trusts, ignore the ability for discretion when it comes to distribution, and automatically attribute incoming gains to a particular beneficiary in the US. So what we're doing, whether it's folks that are moving to the US for the first time or folks that have been they've come from a foreign country to the US and are looking at liquidity events, we are analyzing trustees first to determine in financial statements, first to determine whether we think we have a US grantor - is there someone who is the American taxpayer to create or settle the trust directly or indirectly? And then then we're looking to see whether under code Section six seventy-one through six seventy-nine, the terms of the trust to draft it in such a way that we have either have a - we do have a ground trust attributable to the guarantor or whether someone other than the grantor again, a US taxpayer could be deemed to be the owner under another provision of the grantor trust rules.

And this is a this is an extremely critical function, because if attribution does occur, you can have this funky outcome where you you're distributing income in the foreign country that's being subject to tax. And then there's attribution in the US that's also making the same transaction subject to tax. And because the the initial distribution and the attribution will go to different people, you're not getting matching of foreign tax credits. And you're you're it's resulting in double tax. This is this is only this can even be worse if you've got a you're in a high state tax jurisdiction like California.

So if you're new to the country, you're or you're prepping for a liquidity event, get across your trustee, and understand if you have a grantor, understand if you have a grantor trust or if it's or someone other than the grantor that is a US person is an owner, and then make sure you're properly modeling your situation to understand whether it's any adjustments to to maximize your tax returns.

Next week and over the over the next six weeks we are actually going to dig into specific detail around the individual sections, how that can and the circumstances in which those sections can make a foreign trust or grantor trust. So please tune into that.

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