In United States of America v. Park et al (1:16-cv-10787), Illinois Northern District Court, the US filed an amended complaint seeking recovery of FBAR penalties from a trustee of a revocable trust, estate and beneficiaries of decedent with FBAR penalties.

The complaint alleges that despite having more than $ 7 million in foreign accounts, the decedent filed for and was denied a discharge in bankruptcy. The decedent died in 2012. The decedent’s assets had been previously placed into a revocable trust, which became irrevocable at death. The decedent’s wife was successor trustee and decedent’s children were successor co-trustees.

Among several counts in the complaint is a claim that the FBAR liability of the trust is recoverable under Illinois common law principles “and to the extent there are not sufficient assets in the Trust to satisfy the United States’ claim, from any recipient of assets of the Trust.”

The complaint states that the United States became Mr. Park’s creditor on June 30, 2009, the date his 2008 FBAR filing was due. In addition to the transferees being liable under Illinois common law for transfers made under South Korean probate, the complaint alleges that equitable principles hold the family liable.

The complaint also alleges that, as trustee, Mrs. Park also had a fiduciary obligation to pay the United States’ claim and knew or should have known of the possibility of FBAR penalties by virtue of signing joint 2004-2006 Forms 1040 that indicated an interest in or signature authority over a foreign account. Despite this, Mrs. Park distributed trust assts to other persons, according to the compliant, which adds that as trustee she was personally liable for any deficiency in the trust’s ability to satisfy the FBAR claim.

See full complaint (Pacer Subscription required) at: United States of America v. Park et al (1:16-cv-10787), Illinois Northern District Court

Also see full complaint (Pacer Subscription required) at https://dockets.justia.com/docket/illinois/ilndce/1:2016cv10787/333792

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.