The last installment of our three-part series explains U.S. tax considerations of a divided interest strategy for the bare owner who is a U.S. person. In most situations involving global families, it is the bare owner, rather than the holder of the usufruct, who is a U.S. person. The usufruct holder is often a nonresident alien who puts in place the property division for foreign estate planning purposes. In many instances, one or more members of the younger generation move to the United States. In some cases, the reservation of the usufruct and gift of the bare ownership arrangement is put into place when the child has already acquired U.S. tax residency. As discussed in the first two installments, this is an unsettled area of U.S. tax law that creates substantial uncertainty for the U.S. bare owner.

To continue reading Jenny Longman's article in Tax Notes, please click here.

To read Part I of this series, please click here. To read Part II, please click here.