What is the taxation of foreign trusts?

Foreign trusts in Washington are subject to taxation on income derived from sources within the state, also known as “source income”. This type of income includes dividends, interest, rents, and capital gains. The amount of tax imposed on foreign trusts depends on the type of trust. Washington charges taxes on trust income at the rate of 10 percent, the same as personal income tax. Some trusts, such as charitable trusts, are exempt from taxation. Washington also imposes an estate tax on foreign trusts, which is applied to the net value of the trust at the time of the settlor’s death. This tax rate varies depending on the amount of money held in the trust. Finally, Washington also taxes the distributions from foreign trusts. These distributions are taxed at the rate of the settlor’s marginal tax rate, which is the highest tax rate of any form of income. It’s important to keep in mind that Washington’s taxation laws for foreign trusts can differ from federal laws. It’s important to consult with a tax professional to find out all of the taxes that must be paid, as well as the best way to structure a trust in order to minimize taxation.

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What is the taxation of foreign trusts?

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