When we talk about the American tax system, the complexities can be dizzying, especially for foreign trusts that find themselves subject to U.S. tax regulations. If you're a trustee or beneficiary of a foreign trust with U.S. tax liabilities, there are several essential things you need to be aware of to navigate the system effectively. Seeking the guidance of tax experts like Matthew Ledvina can be invaluable in ensuring compliance and optimizing your tax strategies.

1. Case Examples
U.S. Citizen with Last Domicile in
Switzerland:
Articles V and VI of the Swiss-American Treaty of Friendship,
Commerce and Extradition of 25 November 1850 further
complicate Swiss-U.S. estate matters2. This treaty is
interpreted differently in both nations, and sometimes even
ignored by U.S. courts. This incongruence has led to various
legal complexities and conflicts, further highlighting the need
for expert guidance in such matters.
Jurisdictional Maze: Swiss and U.S.
Perspectives
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The Swiss-American Treaty: A Conundrum
Swiss Citizen with Last Domicile in New
York:
Caution for Trusts:
Swiss authorities typically oversee probate matters and
inheritance disputes at the decedent’s last domicile, which
encompasses the worldwide estate except for real property
subject to foreign jurisdiction1. Switzerland applies the Federal
Statute on Private International Law (PIL) of 18 December 1987
for international estate matters, except for cases covered by
treaties with other countries.
In such cases, Swiss courts will usually probate the will,
applying New York succession law and Swiss procedural law
to the entire estate3. The situation becomes more intricate if
assets like U.S. bank accounts are involved, as ancillary
probate proceedings may be required in the U.S.
Here, New York courts have jurisdiction over
domiciliary probate proceedings4. Swiss banks
usually accept authenticated letters
testamentary or letters of administration from
the U.S. probate court.
It’s crucial to consider a settlor’s marital property
regime before establishing a trust, especially if the
settlor is married to a U.S. person. The reason is that
varying laws and regulations around marital property
could significantly affect the taxation and
management of trust assets.
H T T P S : / / W W W . F A C E B O O K . C O M / M A T H E W L E D V I N A /
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By Matthew Ledvina, JD, LLM (US Taxation)