8938 FOR GIFTED FUNDS NOT HELD PERSONALLY?

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schwaz
Posts: 20
Joined: Mon Oct 29, 2012 12:37 pm

8938 FOR GIFTED FUNDS NOT HELD PERSONALLY?

Post by schwaz »

My wife is getting an advance on an inheritance for a down payment on a house in Canada. She has dual US/CDN citizenship and files taxes & FBAR's.

Her parents are requiring that the funds go directly into escrow (here it's called "in trust") held by her attorney. Once a purchase offer is completed, the attorney will release the funds directly to the seller. The funds will never be directly held in any account by my wife.

Must she still file an 8938 in this instance (also report in '25 FBAR)? The amount triggers the reporting threshold.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: 8938 FOR GIFTED FUNDS NOT HELD PERSONALLY?

Post by nelsona »

I doubt that it meets the requirements of either FBAR or 8938.
HOWEVER, she is becomeing a beneficiary of a foreign trust, which introduces 3520 issues, and at the very least It is also a gift, reportable on 3520, assuming her parents are non-YS citizens.

Why are the parents going through this elaborate dance rather than just give her the money?
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
schwaz
Posts: 20
Joined: Mon Oct 29, 2012 12:37 pm

Re: 8938 FOR GIFTED FUNDS NOT HELD PERSONALLY?

Post by schwaz »

Someone apparently has trust issues. Families-- what can I say?

The money is held in an unsegregated fund lawyers use for client's real estate purchase/sales. From what I understand, the fact that it's temporary, conditioned upon a signed purchase agreement to release funds means it's not a true trust....I hope. Parents are U.S. citizens. They're aware of 709 filing.
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