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Can a successor trustee to a living trust be a foreign citizen, more in details,

Santa Clara, CA |

For my living trust I have designated my aunt living in India (non US citizen) and my cousin living in US (US citizen) to act as alternate successors in that order. After my death, can they administer the trust without issues. Both know each other and work well together. In the event my aunt can't come to the US, can she give permission to the second succcessor to administer and act on trust assets. They are also named as guardians to my son (minor).

Attorney Answers 3


  1. Best answer

    There are several potential problems with naming a non-resident as a successor trustee for your living trust, and guardian for your minor child. For your minor child, it will be necessary for a non-citizen, non-resident to apply to the Probate Court in Santa Clara County (your county), and the proposed guardian will need to demonstrate that they have obtained guardianship in the home country (i.e. India) in order to be considered as the guardian for your minor child. This process could take several weeks or months, and could potentially subject your child to foster care here in the United States until it can all be resolved.

    As for using your aunt as the successor trustee of your living trust, here is an excerpt from the worksheet I use in designing living trust estate plans for my clients

    Disadvantages of Using a Non-Citizen/Non-Resident Trustee: There are special rules that govern trusts if you decide to select a successor trustee who is not a United States citizen and is not a United States taxpayer. These “foreign” trustees, if initially selected and or activated because of your death or disability, may result in your living trust and any trust created after either of your deaths to be treated as a “foreign trust” under the Internal Revenue Code.
    If your living trust or other trusts created after your death are treated as “foreign trusts,” then payments made to those trusts are generally subject to a 30% income tax withholding requirement, unless modified by a tax treaty with the country of the foreign trustee. The withholding requirement applies to any person making a payment. In general, if a person pays or conveys income derived in the United States to a foreign trust or individual foreign beneficiary, or to the foreign trust’s or foreign beneficiary’s foreign or domestic agent, the person conveying the income is liable for the income tax and must withhold.

    Your living trust and other trusts will also have additional reporting requirements, severe penalties for failure to report, the loss of the ability to hold subchapter S corporate stock, and possible forced recognition of capital gains, to name a few of the potential consequences.

    To avoid these results, it will be necessary to appoint one or more “U.S. persons” that have the authority to control all substantial decisions of your trust [Internal Revenue Code Section 7701(a)(30)(E)(ii)] This would mean that if you wish to have a non-citizen who is not a U.S. taxpayer as a trustee, they would be limited to purely administrative tasks such as bookkeeping, collection of rents, and carrying out investment decisions made the U.S. personal trustee.

    If you wish to name a non-citizen who is not a U.S. taxpayer as a trustee, then additional language will need to be added to your trust to make sure that “foreign trust” status is not triggered.

    I work with many Indian families here in the Bay Area on these very issues, and I would be happy to meet with you to discuss what your options are. You may use the provided link to visit my website and schedule a consultation.

    Please remember to mark what you believe to be the best answer to your question. This answer is provided by estate planning attorney Robert P. Bergman, with offices in San Jose, California. Mr. Bergman is a Certified Specialist in Estate Planning, Trust and Probate Law (State Bar of California Board of Legal Specialization), and has been practicing since 1980. This answer does not create an attorney-client relationship, and is only intended to provide general legal advice within the limits of the question asked. If you wish to create an attorney-client relationship for specific legal advice, it will be necessary to enter into an engagement for legal services. More general legal information about wills, living trusts, and estate planning can be found at Mr. Bergman's main website at www.lawbob.com, or his information website at www.lawbob.net. Mr. Bergman also offers free living trust seminars and wealth preservation seminars at his offices in San Jose. For those unable to attend a live seminar, an online living trust seminar may be viewed or downloaded at www.freelivingtrustseminar.com.


  2. If your aunt is unable to perform in the capacity as a trustee then you need to look at the language contained in the trust which most certainly says if she is unable or willing to serve in that capacity then the second name alternate trustee would take control of the trust.

    This participating Attorney does not warrant any information provided, nor are we creating an Attorney-Client relationship by providing said information to you on this site. Nothing contained herein is intended to constitute, offer, induce, promise, or contract of any kind. The content provided is presented as a courtesy to be used only for informational purposes and is not represented to be error free. The Law Offices of John N. Kitta makes no representations or warranties of any kind with respect to its answer to inquiries, and such representations and warranties are being expressly disclaimed. Given limited facts, we are attempting to share relevant information concerning this area of the law as a public service.


  3. Yes there is no rule or law against it, but in the event of complications, it would be much better to have a US resident as a trustee.

    This is not legal advice but a general comment on society.

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