Estate Planning and US capital gains

In continuation with our recent post on estate planning, here is yet another nugget of advice from us:

In our previous posts we talked about protecting assets that have accrued in India from the potential high US capital gains tax that may come into effect next year. In this process of planning- that of setting up a trust in India and putting Indian assets in it to protect it from US capital gains, the IRS has look-back rules.

What this means is that people who are not yet green card holders but who are on the path to getting one need to pay attention (to these look-back periods).

You will have to factor in a cool off period between the time you set aside these assets as a grantor to a foreign trust and the time you apply for or obtain a green card.

Talk to an advisor well ahead of time rather than be surprised later that all that planning was in vain.