FGA Trust Ties Cross-Border Wealth Plans to Family Goals, Citing 3 Pillars

Q: How can a single misstep in cross-border trust planning trigger severe penalties for international families with hidden US connections?

A single error can become extremely costly when a family has an unrecognized U.S. link — such as a U.S. citizen child, green card holder, U.S.-resident beneficiary, or a trustee change that makes a trust “foreign” for U.S. tax purposes. In that case, what looks like routine offshore planning can trigger U.S. reporting on Forms 3520, 3520-A, 8938 and FBAR, even if no U.S. tax is due. The danger is that the IRS penalizes missed disclosure itself, not just unpaid tax. Late or missing Form 3520 filings can bring penalties of 35% of an unreported transfer to or distribution from a foreign trust, or 5% per month on an unreported foreign gift, up to 25%. If a foreign trust with a U.S. owner fails to file Form 3520-A, the penalty can be the greater of $10,000 or 5% of trust assets. After IRS notice, additional continuation penalties can apply. The tax fallout can go beyond paperwork. If advisers miss trust classification under the U.S. court and control tests, or fail to identify a U.S. beneficiary, the structure may be taxed under harsh foreign trust rules, including throwback tax and interest charges on accumulated income. Holdings inside the trust can also create separate CFC, PFIC, crypto-reporting or digital-asset issues. That is why Harilela’s point about starting with the family’s real facts and coordinating legal, tax and fiduciary specialists matters: one overlooked U.S. connection in a cross-border family can turn a trust plan into a major compliance and penalty event.

1 articles · Updated · Hubbis · Nov 6

Kavi Harilela said FGA Trust starts trust design with detailed client conversations, arguing families often clarify their real objectives only after discussing what their wealth should achieve across generations.
Three elements underpin that approach: defining family intentions first, giving clients digital portal access for instructions and statements, and coordinating advice across legal, tax, insurance and investment specialists.
FGA Trust said the model is built for international families with assets spread across jurisdictions and asset classes, from property, shares and conventional investments to digital assets, art, physical gold, aircraft and yachts.
Hong Kong remains the firm’s operating base, with Harilela pointing to its common-law framework and international financial links as support for administering complex cross-border structures.