Why trusts trigger enhanced review
Layered ownership obscures origin of funds. Compliance teams map each hop: settlor contribution, subsequent transfers between entities, loans, and downstream distributions. When the applicant is a beneficiary rather than the settlor, brokers must show that the distribution was authorized under the trust instrument and consistent with anti-money-laundering policy.
Minimum documentary stack
- Executed trust deed and amendments (redacted for unrelated beneficiaries where accepted)
- Trustee resolution authorizing the specific distribution for CBI fees and investment
- Bank statements for the trust account showing funding into the wire path
- Evidence of settlor wealth origin (employment, sale, business dividend) at the contribution layer
- If loans are involved, loan agreements, repayment terms, and collateral descriptions
Gifts vs. beneficial entitlement
A pure gift from a parent to an adult child differs from a discretionary distribution that the trustee could have refused. Narratives must match the legal structure. Advisors should avoid letting clients describe trust cash flows as “gifts” in intake forms when trust law treats them as distributions subject to fiduciary standards.
Coordinating with U.S. reporting
Trusts with U.S. grantors or beneficiaries may implicate Form 3520/3520-A, PFIC reporting inside foreign structures, or FATCA classification. Your role is to ensure immigration counsel and tax counsel compare notes before the wire date, not after the government requests a source-of-funds supplement.
Related reading
How a Golden Visa affects U.S. tax residency · Advisor Resources: CBI due diligence checklist