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I have a question that hopefully someone may know about. I am British living in USA. My mother's house, in my name and my sisters, has just been sold in the UK. The monies from the house are being placed in a Trust to pay for my mother's home care. I am paying tax in UK and planning to pay tax in USA. I just heard that I may not have to pay capital gains tax yet in USA due to the money being in the Trust and I will not receive any of that money until my mum dies. So, do I have to pay capital gains tax in the USA at the moment, if the money is in a Trust? Does anyone have any expertise in this question or gone through the same thing as me. If so could you pass on a website link explaining this situation. Thank you in advance and I appreciate your help.

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I thought you were in the UK. Try my suggestion the other way round. Give the trust documents to a USA tax person, ask for three options in order, send them to a UK tax person and ask them to pick the one that works best in the UK. That’s what I would do anyway in this situation.
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There are a few other possibilities for getting legal help.

1.    Where are you living, i.e., in what State?  (I'm not asking to be personal, just to determine if you're in an area with access to major law firms with international branches or affiliations).  

International law has become a practice area of law (like personal injury, estate planning, real estate., etc. which are each "practice areas" or fields of law.) 

There ARE  law firms that practice probate law internationally.   There might be attorneys there who could help sort out this situation.   

2.   Who drafted the Trust?  An attorney?   In the US or in the UK?   This is a basic but critical factor.
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anonymous963928 Oct 2019
Thanks
1. NY
2. Trust drafted by a solicitor/lawyer in the UK
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One way to approach this would be to get the best suggestion from a UK tax person (possibly three options in order), send them to a USA tax person and ask them to pick the one that works best for the USA.
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anonymous963928 Oct 2019
Thank you for your help:)
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It would probably be advisable to speak to a lawyer unless you have a tax consultant. I have a situation possibly similar. My mother has some money in a trust that was set up for her by her mother decades ago. My mother is presently in AL. She has a LTC policy. That may run out soon. The trust will then pay for the AL. If she should pass before the money runs out I would inherit the money tax free. I am her sole heir. I wouldn't rush to give the US any money. What do you do about your income taxes in this country? If you have someone or plan to that person should be able to answer this for you.
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anonymous963928 Oct 2019
Thank you for your help:)
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You really need to talk to a US based tax accountant that is versed in both UK and US Tax Code. This is too complex an issue to get answers from online.
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This is a complex situation, with 2 potential jurisdictions. 

But first, though, where was the Trust executed, is it a Living Trust or another kind of trust, and under which country's laws was it drafted and executed, hopefully by an attorney or solicitor (if in the UK)?  

Also, did your father pass already?    There's a concept called "step-up" that could come into play, but I won't opine on its applicability since I'm not currently up to date on the issues.

I know nothing about capital gains taxes in the UK, but in the US, they're a function of a few issues, including the sale price and the amount of potential gain.  

Start here - there are a lot of hits for cap gains taxes.    Many people wouldn't even have to worry about them b/c of the minimum threshold.

https://www.google.com/search?source=hp&ei=1IabXePCH8Tv9AOmlZSABA&q=capital+gains+taxes+on+home+sale&oq=capital+gains+taxes+on+home+sale&gs_l=psy-ab.3..0j0i22i30l9.940.10120..10281...9.0..0.133.4350.5j34......0....1..gws-wiz.......0i131.ThZtyZWty8o&ved=0ahUKEwjj_OCw5orlAhXEN30KHaYKBUAQ4dUDCAs&uact=5#spf=1570473694079

Additionally, you indicate that title is vested in yours and your sisters' name, but apparently not your mothers?   Did you hold title in equal shares?   And presumably, the house was sold for cash, not some type of land contract?

I'm also confused about the Trust and the house ownership.   This is a Trust made by your mother (or her and her deceased husband?) for her and in her behalf?   How does the house come into play as a trust asset if you and your sister held title?  Apparently title to the house was never transferred, or vested, in the name of the Trust?   If not, then I'm confused how it can be a Trust asset. 

Do you follow my line of thinking?  I.e., you and your sister held title, the house wasn't titled in the name of the Trust for the benefit of your mother, but the house benefits are for her, and she apparently didn't have any vested interest in the house and won't until she needs it for care? 

If the house was titled in the name of the Trust, any capital gains, if appropriate, would I think be the responsibility of the owners (you and your sisters) and not the Trust.   Is my understanding correct?

And it makes a BIG difference given the accelerated tax rates on trust income in the US.  

I can see this as a complex asset management scheme; I'm just trying to figure out.  This sounds like either a skilled asset planner created it, or someone without it. 

I think perhaps the first issue is to determine jurisdiction for any potential gains as well as the issue of title not vested in your mother's name.
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anonymous963928 Oct 2019
Thank you.
In the UK, my sister and I are on the deed and not in my mothers name.
My father died in 2003.
The monies from the sale are to be placed in a Trust set up to pay for mothers care and needs.
We see none of that money til she dies.

Finding someone who understands both UK and USA tax situations is nearly impossible - we first asked 6 professionals and none of them knew and we found out by pure research and help from friends!

I am not sure if this helps you. Thank you for your time and interest.:):):)
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Thank you very much for the link:)
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Go to www.bogleheads.org and ask this question.
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