Venable of counsel Charles Kolstad was quoted in the March 12, 2012 issue of the Wall Street Journal on the impact of the Foreign Account Tax Compliance Act, also known as Fatca, on overseas holdings. Under Fatca, citizens and foreigners living in the US will be required to make extensive disclosures about overseas holdings on their tax returns or face harsh penalties. The new law takes effect later this year.
Kolstad said he recently advised two sisters who inherited a fortune from their father in Swiss bank accounts to move the money to the U.S. Commenting on the impact of the new law, Kolstad said, “Five years ago, we would have said to leave it where it was,” adding, “An alternative to a Swiss account… may be a trust set up in Delaware, Alaska and South Dakota, where trust laws favor trustees.”
Kolstad noted that new law faces sensitive issues regarding confidentiality. Using an example of a grandfather with $100 million who doesn't want family to know exactly how much money he has, or what they stand to inherit. Under Fatca, Kolstad said, “you're asking the grantor or trustee to open the kimono and reveal information they might regard as private and confidential.” Kolstad added that while the grandfather’s reports to the IRS would be confidential, each beneficiary would have to report, too. “So the man would have to reveal information about his estate to each person who stood to inherit,” said Kolstad.
Kolstad said he recently advised two sisters who inherited a fortune from their father in Swiss bank accounts to move the money to the U.S. Commenting on the impact of the new law, Kolstad said, “Five years ago, we would have said to leave it where it was,” adding, “An alternative to a Swiss account… may be a trust set up in Delaware, Alaska and South Dakota, where trust laws favor trustees.”
Kolstad noted that new law faces sensitive issues regarding confidentiality. Using an example of a grandfather with $100 million who doesn't want family to know exactly how much money he has, or what they stand to inherit. Under Fatca, Kolstad said, “you're asking the grantor or trustee to open the kimono and reveal information they might regard as private and confidential.” Kolstad added that while the grandfather’s reports to the IRS would be confidential, each beneficiary would have to report, too. “So the man would have to reveal information about his estate to each person who stood to inherit,” said Kolstad.