I am both the trustee and a beneficiary of a U.S. irrevocable trust established by my parents nearly 20 years ago. I have been paying Japanese income tax on the trust’s assets since becoming a Japan resident 10 years ago.
Upon my death, the remaining family members will inherit all of the trust’s assets. Under the terms of the trust, I (as trustee) may distribute both principal and income to myself for living expenses. So far, I haven’t made any distributions, allowing interest and gains to accumulate within the trust.
If I distribute any portion of the trust’s income or principal to myself, would that trigger Japanese gift tax? Maybe NTA could argue that assets assigned to successor beneficiary family heirs are gifting me their share through any distribution? What are the starkimpossibilites of this occuring?
by wrightbro