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How banks and trust companies work with trusts

Banks and trust companies can serve in trust roles. The rules also address who holds trust property and how certain accounts connect to U.S. reporting rules.

Who holds trust property

A trust separates legal title from beneficial ownership, with the trustee holding title for beneficiaries or specified purposes. Jersey law describes a trustee as holding property or having property vested in the trustee for a beneficiary or another trust purpose. The person who provides property or makes a disposition on trust is called the settlor under that law.[11]

A bank or trust company may act as a fiduciary, including as trustee, under Delaware law. The fiduciary role is distinct from the account provider role: a financial institution can maintain an account, while a trustee holds or administers property in the trust role. Delaware law also recognizes fiduciaries acting under a governing instrument, which can define their duties and powers.[2]

The account records do not alone establish who has a financial interest for FBAR purposes. FinCEN's instructions include the owner of record or holder of legal title, and also identify circumstances where a trust's grantor or a beneficiary has a reportable financial interest. Signature authority is separately defined by a person's ability to direct the disposition of account assets through communication with the institution maintaining the account.[12]

What counts as a financial account

The FBAR instructions define financial accounts broadly to include securities and brokerage accounts as well as savings and checking accounts maintained with a financial institution or another person performing similar services. They also include specified insurance and pooled fund interests.

Form 8938 instructions describe a foreign financial account as including a depository or custodial account maintained by a foreign financial institution. The instructions describe such institutions as including businesses that accept deposits or hold financial assets for others as a substantial part of their business. An interest in a foreign trust held for investment outside an account can also be a specified foreign financial asset.[7]

The trust's administration and the account's location can therefore be separate facts in the reporting analysis. Form 8938 instructions also say that, in most cases, beneficiary status alone does not mean a person owns an asset held by a trust. A person treated as owner under the grantor trust rules has an interest in specified foreign financial assets held by the portion treated as owned, subject to the stated reporting exception.[7]

U.S. reporting rules tied to trust accounts

A U.S. person may have an FBAR financial interest when the person is the account's owner of record or legal title holder, even if the account benefits someone else. The instructions also cover a trust where the U.S. person is the grantor and has an ownership interest for federal tax purposes, or has more than a 50 percent present beneficial interest in trust assets or income for the calendar year.[12]

The FBAR instructions set a general filing threshold when the aggregate value of foreign financial accounts exceeds $10,000 at any time during the calendar year, for a U.S. person with a financial interest or signature authority. A trust beneficiary within the specified financial interest category is not required to report the trust's foreign accounts on an FBAR if the trust, trustee, or agent is a U.S. person and files an FBAR disclosing those accounts.[12]

Form 3520 applies to certain transactions with foreign trusts, ownership of foreign trusts under the grantor trust rules, and certain gifts or bequests. The IRS instructions say a U.S. person treated as owner of any part of a foreign trust completes Part II. A U.S. person receiving a distribution from a foreign trust may have a Part III filing obligation. The instructions include certain trust payments of credit card charges or checks on the trust bank account as distributions.[5]

Form 8938 is a separate reporting framework for specified foreign financial assets. Its instructions describe an exception for assets held by a portion of a foreign trust treated as owned under the grantor trust rules when the person reports the trust on Form 3520 and the trust files Form 3520-A, or the person files a substitute Form 3520-A, and reports the filings on Form 8938. An interest in a foreign trust may have to be reported on Form 8938.[7]

Records and institutional roles

Jersey law requires trustees to keep accurate accounts and records of the trusteeship. It also requires trust property to remain separate from the trustee's personal property and separately identifiable from other property held by that trustee. These requirements describe records and separation within the trusteeship, not which financial institution must maintain a particular account.[11]

Trust company regulation varies by jurisdiction. Nevada law generally requires a retail trust company to comply with its chapter and hold a license, subject to stated exceptions. Singapore's Trust Companies Act governs licensing and regulation of trust companies there.

Trust roles and financial accounts

Trustee and account holder

The trustee holds legal title to trust assets and makes the decisions assigned to the trustee under the trust deed.[13]

Under CRS account holder rules, if a financial institution lists a trust as the holder or owner of a financial account, the trust is the Account Holder rather than the trustee, owners or beneficiaries.[14]

Signing authority

Signature authority means the authority of an individual, alone or with another person, to control the disposition of assets held in a financial account by direct communication, in writing or otherwise, to the person with whom the account is maintained.[15]

Protector and investment manager

A protector may be given powers to replace the trustee or approve certain actions.[13]

A trustee may delegate management of trust property to investment managers whom the trustee reasonably considers competent and qualified, except where the trust terms specifically provide otherwise.[11]

The trustee may also employ bankers and brokers, along with custodians and investment advisers in connection with trust affairs or property.[11]

CRS controlling persons

Under CRS rules, a trust's settlors, trustees, protectors and beneficiaries or beneficiary classes are controlling persons regardless of whether they control its activities.[14]

Banking and custody charges

Banking and custody fees are charged directly by the institution holding the trust's assets and are not part of the trustee's fee, according to practitioner commentary.[16]

Practitioner commentary also identifies banking charges among recurring trust costs, alongside annual trustee fees, government renewals, protector fees where applicable, and CPA reporting.[17]

Questions and answers

Who holds property in a trust?

The trustee holds or has vested trust property in the trustee role, for a beneficiary or another trust purpose. The settlor is the person who provides property or makes a disposition on trust under Jersey law.[11]

Does a bank account held for a trust count as a financial account?

The FBAR instructions include deposit and checking accounts, along with brokerage and savings accounts, maintained with financial institutions in the financial account definition. Whether the account is foreign depends on its physical location under those instructions.[12]

When can a U.S. person have an FBAR interest through a trust?

The instructions include a trust where the person is the grantor and has an ownership interest for federal tax purposes. They also include a trust in which the person has a greater than 50 percent present beneficial interest in assets or income for the calendar year.[12]

Can a trustee file an FBAR that covers a beneficiary?

A beneficiary in the specified financial interest category is not required to report the trust's foreign accounts on an FBAR if the trust, trustee, or agent is a U.S. person and files an FBAR disclosing those accounts.[12]

What foreign trust activity can lead to Form 3520 reporting?

The IRS instructions list certain foreign trust transactions, ownership under the grantor trust rules, and receipt of certain distributions among Form 3520 reporting categories. A U.S. person treated as owner of any part of a foreign trust completes Part II under the instructions.[5]

How does Form 8938 treat foreign trust assets?

The instructions include an interest in a foreign trust held for investment outside a financial account among specified foreign financial assets. They also describe a reporting exception for certain assets held by a trust portion treated as owned when the stated Form 3520 and Form 3520-A conditions are met.[7]

Related glossary terms

  • Participating foreign financial institution: The IRS describes a participating foreign financial institution as an FFI that reports U.S. account holders who are specified U.S. persons under FATCA.
  • FATCA: FATCA requires certain U.S. taxpayers to report foreign assets and financial institutions to report accounts to the IRS. Form 8938 may apply at thresholds.
  • FBAR: FinCEN describes the FBAR filing rule for U.S. persons with foreign accounts. It covers the $10,000 aggregate threshold, account interests and exceptions.

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Sources and data notes
  1. law.cornell.edu, 26 CFR § 1.672(f)-1, Foreign persons not treated as owners. https://www.law.cornell.edu/cfr/text/26/1.672%28f%29-1. Retrieved .
  2. delcode.delaware.gov, Delaware Code Online. https://delcode.delaware.gov/title12/c033/. Retrieved .
  3. leg.state.nv.us, NRS: CHAPTER 669, TRUST COMPANIES. https://www.leg.state.nv.us/NRS/NRS-669.html. Retrieved .
  4. www.mas.gov.sg, https://www.mas.gov.sg/regulation/acts/trust-companies-act. https://www.mas.gov.sg/regulation/acts/trust-companies-act. Retrieved .
  5. irs.gov, Instructions for Form 3520 (12/2025) | Internal Revenue Service. https://www.irs.gov/instructions/i3520. Retrieved .
  6. bj.admin.ch, Trust. https://www.bj.admin.ch/en/trust. Retrieved .
  7. irs.gov, Instructions for Form 8938 (11/2021) | Internal Revenue Service. https://www.irs.gov/instructions/i8938. Retrieved .
  8. law.cornell.edu, 26 U.S. Code § 6048, Information with respect to certain foreign trusts. https://www.law.cornell.edu/uscode/text/26/6048. Retrieved .
  9. admin.jerseylaw.je, Trusts (Jersey) Law 1984. https://admin.jerseylaw.je/laws/current/l_11_1984. Retrieved .
  10. cima.ky, Cayman Islands Trusts Licenses Licensing Requirements. https://www.cima.ky/trusts-licensing-requirements. Retrieved .
  11. jerseylaw.je, Trusts (Jersey) Law 1984. https://www.jerseylaw.je/laws/current/l_11_1984_20260319. Retrieved .
  12. fincen.gov, BSA Electronic Filing Requirements for Report of Foreign Bank and Financial Accounts (FinCEN Form 114). https://www.fincen.gov/sites/default/files/shared/FBAR%20Line%20Item%20Filing%20Instructions.pdf. Retrieved .
  13. blakeharrislaw.com, Questions to Ask Before You Set Up an Offshore Trust. https://blakeharrislaw.com/blog/questions-you-must-ask-before-creating-an-offshore-trust. Retrieved .
  14. crs.hsbc.com, How to fill the Common Reporting Standard Entity self-certification form (February 2026). https://www.crs.hsbc.com/-/media/crs/pdfs/gpb/crs-entity-classification-guide.pdf. Retrieved .
  15. taxlitigator.com, Overview of FBAR Reporting Requirements, Taxlitigator. https://www.taxlitigator.com/overview-of-fbar-reporting-requirements/. Retrieved .
  16. alperlaw.com, Cook Islands Trust Cost: Setup Fees, Annual Pricing, and What to Expect. https://www.alperlaw.com/offshore/cook-islands-trust/costs/. Retrieved .
  17. blakeharrislaw.com, Nevis Trust: How It Works and What It Costs. https://blakeharrislaw.com/blog/nevis-trust-cost. Retrieved .

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