When an Indian resident dies with a U.S. beneficiary of his estate what are the risks?

The Singh Family own a consortium of established businesses in India and substantial capital assets in the U.K., Dubai and Singapore.  The majority of the non business assets are owned through a discretionary family trust in the Singapore.  The assets in the trust primarily consist of equities, mutual funds, and real estate.

While the patriarch was alive 100% of the profit realized from the portfolio was accumulated by the trustee in Singapore.  Since his death the trustee has started distributions to each of the children.

The Singh Family have three sons, the eldest is based in Delhi, one is based in London and one is based in N.Y.

While the trust that is based in Singapore is a foreign non grantor trust for U.S. tax purposes, the investments it has made are classified as investments in passive foreign investment companies and the distributions that are being made to the U.S. son would be subject to throwback taxation as they are being made out of accumulated profits.


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