Advise on trust for depedent children -US trust, CDN trust?

[Alex]

I am dual USC/CDN residing in Canada. My two dependent children are also dual & living in Canada.

In my will, I would like to set up a trust for them to safe guard their inheritance until they are old enough to use it properly.

My questions are:

1. Am I correct in thinking that there could be adverse Canadian capital gains consequences for my kids if I use a US trust instead of a Canadian trust? Does the nationality of the trust matter for the capital gains or the cost basis of the assets received? I don't entirely understand this because it seems like the assets are subject to capital gains in Canada at time of death anyway? So, if the concern is correct could you help me understand the logic behind it?

2. Are there any other advantages of setting up the trust as a Canadian trust?

3. I worry about the US compliance risk of a Canadian trust, when I am no longer there to see that all the foreign trust foreign filing forms are filed. The possible fines are just so large. Would be great to get your thoughts on the following ideas for addressing this or any other suggestions:

a. Just use a US trust and hope the Canadian paper work gets filed right.

b. Have it start as a Canadian trust to avoid any of the Canadian capital gains/cost basis issues asked about in (1). Now the Canadian cost basis is the market value at time of transfer? If so, have the trust move to the US a year later, so that Canadian capital gains at exit are just one year's gains. Then keep the trust in US to avoid US compliance risk as in (a).

c. Establish a dual resident trust if that is even possible -- let me ask about that below:

4. Can a trust be a dual resident: US and CDN fo legal andr tax purposes? If so will both countries treat it as a foreign trust or would both countries treat it as a domestic trust?

Thanks again so much for any help you can give me with these questions.