A U.S. Trust for a Child or Other Beneficiary in Germany

For U.S. settlors and families who provide for a child or another beneficiary living in Germany through a trust.

Purchase the guide, USD 100

The case the guide follows

A widower in Bethesda revises his estate plan. His daughter lives in Frankfurt with her German husband; his son lives in Arlington. The draft his attorney prepares keeps each child’s share in a discretionary trust for life. Nothing happens in Germany when the trust is funded. The guide explains what happens later: at the settlor’s death, at the first distribution to the daughter and in each year in which the trust keeps its income.

What the guide covers

• Why German law has no trust, and how German courts deal with a U.S. trust instead.
• When German inheritance and gift tax applies: at funding, at the settlor’s death, on distributions and on dissolution.
• Why it matters whether the beneficiary in Germany has a discretionary interest or an entitlement.
• How German law can tax the beneficiary on trust income that is not distributed (§ 15 AStG), and the changes the Ministry of Finance has proposed.
• The trustee’s U.S. withholding duties and the two treaties between Germany and the United States.
• The German compulsory share and the choice of law.
• An outright bequest compared with a discretionary trust, and the practical steps a settlor takes before the instrument is signed.

The full title

A U.S. Trust for a Child or Other Beneficiary in Germany: How German Law Recognizes the Trust and Taxes Its Distributions, Its Dissolution, and Its Income

A version written for estate planners, trustees and CPAs is A U.S. Trust with a Beneficiary in Germany, for Advisors.