New Regulations for Professional Trustees in 2015

Two new regulatory requirements will affect professional trustees in 2015. First, the Foreign Account Tax Compliance Act (FACTA) requires all non-U.S. trusts (a trust with a non-U.S. person controlling any substantial trust decision) to comply with a reporting requirement of disclosing all accounts owned by U.S. taxpayers. Failure to report can result in imposition of a severe withholding tax on U.S. source payments to the trust.

Second, there will be a new requirement to “unbundle” fiduciary fees to distinguish the trust administration fee, which can be fully deducted on the trust’s income tax return, from investment management fees that are subject to the 2% floor for deductibility of miscellaneous itemized deductions. This likely will not apply to trustees that do not seek outside investment advice.

See Gail E. Cohen, “A Quiet Year – But Change is on the Horizon,” (December 22, 2014).

Posted by Ryan Moore, Associate Editor, Wealth Strategies Journal