Does an alter ego trust still defer tax if the settlor is a US person?
The Canadian deferral and the foreign treatment are decided separately. Under Canadian rules the deemed disposition is pushed to the settlor's death, so the trust itself does not trigger a disposition when it is funded. That says nothing about how the settlor's other tax system sees it. A foreign grantor-trust regime can look through the trust entirely and attribute its income back to the settlor, and a reporting regime can require annual disclosure of the trust and its assets regardless of what is owing. So the deferral can hold on one side of the border while a separate filing obligation and a separate measure of income run on the other. The residence and citizenship of every party is the first thing to establish.
Who has to report a joint partner trust to a foreign tax authority?
Reporting follows the people, not the deed. In a joint partner trust the settlor, the spouse who is a beneficiary, and the trustees are each tested individually against the foreign regime that applies to them. If one spouse is a foreign person, that spouse can carry a personal obligation to disclose the trust, its assets and its income, even where the Canadian position is a straightforward deferral and even where nothing is payable. Where a foreign grantor-trust regime applies, the settlor may also be treated as owning the trust's income directly. The practical consequence is that one arrangement can generate filings in two systems on different measures of the same income, so each party's obligations are mapped before the deed is signed.
Will an alter ego trust keep my estate out of probate without creating foreign tax?
An alter ego trust can keep assets out of the estate for probate purposes and defer the death-year disposition here. Neither of those effects reaches a foreign tax system. A foreign regime may treat the same trust as transparent, which means it looks past the trust to the person who settled it and taxes or reports as though the assets were still held personally. In that situation the estate administration is simpler and the foreign position is more complicated, not less. Whether that trade is worth making depends on who the settlor and the beneficiaries are, so the residence of each is tested before the structure is chosen rather than after it has been funded.
Which death triggers the deemed disposition in a joint partner trust?
In a joint partner trust the deferral runs to the death of the surviving spouse rather than the first spouse to die, so the trust's assets are measured once, later. An alter ego trust defers to the settlor's death. That single difference is what makes the choice between the two structures a planning decision rather than a drafting preference, because it sets when the Canadian liability crystallises and therefore which year needs funds available to meet it. If either spouse is a foreign person, the foreign system's own trigger may not be the same event, and it may treat the trust as transparent throughout. Aligning the two timelines, or accepting that they differ and planning for both, is the work.
Our alter ego trust has a beneficiary who moved to the US — what changes?
The trust deed does not change, but the testing does. The residence of every party is the first thing examined, and a party who becomes a foreign person brings that country's rules with them. A beneficiary can acquire a personal obligation to report their interest in the trust and the distributions they receive, and depending on the regime the trust itself can become a reportable foreign structure. Nothing in the Canadian deferral is disturbed by the move; the exposure is additive. In practice the first steps are establishing the date the status changed, identifying which disclosures run from that date, and deciding whether the beneficiary's interest should be varied, if the deed permits it, before the position hardens.
Is an alter ego trust a bad idea if I hold a green card?
It can be. These trusts are chosen for probate avoidance and for the deferral of the death-year disposition, and both of those aims are domestic. A settlor who is a foreign person for tax purposes may find the same arrangement treated as transparent and reportable abroad, so the structure adds disclosure without adding protection on that side. That is not an argument against the trust in every case — sometimes the administrative benefit still justifies it, and sometimes a different vehicle achieves the same succession aim with less friction. The point is that the answer turns on status rather than on the wording of the deed, and status has to be established first.
How many days can I spend in a country before I become tax resident?
It depends on the country, and a day count is only ever the start. Many use a threshold in a tax year, some also look at averages across several years, and some have no day test at all and decide on where your home and life are. Two countries can both conclude you are resident, which is what the treaty tie-breaker exists to settle. Counting days without checking the tie-breaker is how people end up filing as resident nowhere. See the residency tie-breaker.
Can I avoid capital gains tax on a foreign property?
Not by virtue of it being foreign — there is no exemption for that, and the "keep it offshore" advice you may have read is how people acquire penalties rather than savings. What genuinely reduces the gain is ordinary and legitimate: principal residence relief where the property qualifies and the designation is made correctly, a properly built cost base including acquisition costs and capital improvements, the timing of the disposition, the treaty rules for real property, and credit for the foreign tax paid. See principal residence and foreign property.
