Audit Profile

Q. I want the safety advantages of an international trust. But if I set one up, will I be setting myself up for an IRS audit?

A.  No.  Forming an international trust will not increase the chance of an audit or other scrutiny.  Just be sure to file all the IRS-required reports.

The tax rules for offshore trusts are clear and unambiguous. There’s nothing to argue about.  So just follow the rules.  Go on green and stop on red, and you won’t get a ticket.

Include the trust’s investment income on your own tax return. That’s what the rules tell you to do. And tell your accountant about your offshore trust, so he can prepare and file the reports the IRS wants. Keeping your accountant in the loop keeps you out of trouble.

If you talk to any tax attorney or accountant who deals with international financial planning about whether an offshore trust will attract trouble with the IRS, the answer will be “No. But make sure you file the required reports.”

When you pay your taxes and follow the reporting rules, there’s nothing for the IRS to argue about. Go on green, stop on red.