US Beneficiaries of Foreign trusts


We offer the following US compliance services specifically applicable to US beneficiaries of foreign trusts:

  • Determination of Distributable Net Income (DNI) and advice with respect to required distributions
  • Preparation of "Foreign Nongrantor Trust Beneficiary Statement” or “Foreign Grantor Trust Beneficiary Statement” as required under IRS Notice 97-34
  • Preparation of a “65-day election” under section 663(b) 
  • Preparation of Form 3520 “Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts” with respect to any contributions to or distributions from a foreign trust
  • Preparation of Form 3520-A “Annual Information Return of Foreign Trust With a U.S. Owner”


A penalty applies if Form 3520 is not timely filed or if the information is incomplete or incorrect. Generally, the initial penalty is equal to the greater of $10,000 or the following (as applicable):

  • 35% of the gross value of any property transferred to a foreign trust for failure by a U.S. transferor to report the creation of or transfer to a foreign trust.
  • 35% of the gross value of the distributions received from a foreign trust for failure by a U.S. person to report receipt of the distribution.
  • 5% of the gross value of the portion of the foreign trust's assets treated as owned by a U.S. person under the grantor trust rules (sections 671 through 679) for failure by the U.S. person to report the U.S. owner information.
  • U.S. person who has a foreign trust may be subject to an additional penalty of 5% of the trust assets (or $10,000 if greater), if the SIPP trustee fails to file a timely Form 3520-A or does not furnish all of the information required by section 6048(b) or includes incorrect information.

Additional penalties will be imposed if the noncompliance continues for more than 90 days after the IRS mails a notice of failure to comply with the required reporting.


If you complete our contact form we would be happy to discuss your individual situation and offer our help.


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