FBAR Rules for Trust Beneficiaries
Foreign account values must meet the FBAR filing threshold, and certain interests or authority can create a filing obligation. A separate rule covers a trust beneficiary with a greater than 50 percent present beneficial interest.
The account-value threshold
A U.S. person must file an FBAR when they have a financial interest in, or signature or other authority over, at least one foreign financial account and the aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year reported. U.S. persons include citizens, residents, corporations, partnerships, limited liability companies, trusts, and estates.[1]
The threshold applies to the aggregate value of the foreign accounts, not to each account separately. FinCEN states that no FBAR is required when the aggregate value does not exceed $10,000. The IRS also says whether an account produced taxable income does not affect whether it is a foreign financial account for FBAR purposes.[1][3]
The IRS identifies foreign accounts generally as accounts at financial institutions located outside the United States. The FinCEN instructions list account types that include securities, brokerage, savings, checking, and deposit accounts, along with certain cash-value insurance or annuity policies and qualifying pooled fund shares.[1][5]
Interests that can create a filing obligation
A financial interest can arise from direct ownership or from specified relationships to the account's legal owner. The FinCEN instructions include an account where the U.S. person is the owner of record or legal title holder, even when the account is maintained for another person's benefit.[5]
The instructions also treat an account as a financial interest when its record owner or legal title holder acts as the U.S. person's agent or nominee. They identify ownership thresholds for corporations and partnerships, and include specified trust relationships.[5]
For a trust, the listed categories include a U.S. person who is the grantor and has an ownership interest for federal tax purposes. A separate category covers a trust where the U.S. person has a present beneficial interest in more than 50 percent of its assets or receives more than 50 percent of its current income for the calendar year.[5]
The instructions state that an entity's federal tax treatment does not determine whether it has an FBAR filing requirement. A trust whose income, deductions, or credits are taken into account by another person for federal tax purposes may still have a filing requirement if otherwise required.[5]
Signature or other authority
Signature authority concerns an individual's ability to control the disposition of account assets by communicating directly with the financial institution that maintains the account. The instructions say this authority may be exercised alone or together with another individual, and communication may be in writing or otherwise.[5]
The filing requirement applies to a U.S. person with a financial interest in, or signature authority over, a foreign financial account. Financial interest also covers specified relationships to legal title holders, while signature authority turns on an individual's direct control over dispositions.[5]
The trust-beneficiary reporting rule
A trust beneficiary with a greater than 50 percent present beneficial interest in the trust's assets or income falls within the financial-interest category described in the instructions. That category applies for the calendar year, and the general threshold still depends on the aggregate foreign account value exceeding $10,000.[5]
The beneficiary is not required to report the trust's foreign financial accounts on a separate FBAR if the trust, its trustee, or its agent is a U.S. person and files an FBAR disclosing those accounts.
The exception covers only the trust's own accounts that the filing discloses. Any other foreign account the beneficiary holds or controls still counts toward the $10,000 aggregate test.[1]
Data table for this infographic
| Topic | FBAR | Form 8938 |
|---|---|---|
| Summary | The two filings overlap in subject matter but have separate tests, separate recipients and separate trust rules. | |
| Form and recipient | FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), filed with FinCEN | Form 8938, Statement of Specified Foreign Financial Assets, attached to the annual return and filed with the IRS |
| Who files | A United States person with a financial interest in or signature authority over foreign financial accounts | Certain U.S. taxpayers holding financial assets outside the United States |
| What is counted | Foreign financial accounts | Specified foreign financial assets: accounts at foreign financial institutions, plus listed assets held for investment, such as stock or securities issued by a non-U.S. person and any interest in a foreign entity |
| Value test | Aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year | Generally an aggregate value above $50,000, with higher thresholds in some cases. Form 8938 is not needed when no income tax return is required |
| Foreign trust rule | Exception for a beneficiary whose financial interest in a trust account rests on a present beneficial interest in more than 50 percent of the trust assets or current income: no filing is needed when the trust, trustee or agent is a U.S. person and files an FBAR disclosing the trust's foreign accounts | Specified foreign financial assets held by the owned portion of a foreign trust (sections 671 through 679) are excluded when the owner timely files Form 3520 for the same tax year, ensures the trust timely files Form 3520-A or a substitute, and reports both filings on Form 8938 |
| Other reporting | Specified foreign financial assets already reported on Form 3520 or 3520-A (filed by the trust), 5471, 8621 or 8865 need not be reported a second time on Form 8938. Form 8938 still lists which of those forms were filed, and the asset's value still counts toward the threshold. | |
| Where the two meet | Filing Form 8938 does not relieve a person of the FBAR requirement if the person is otherwise required to file the FBAR. The IRS publishes a comparison chart of the two sets of filing requirements. | |
| Notes | Form 8938 thresholds may be higher in some cases. The instructions for the tax year concerned govern. | |
| Sources | FinCEN FBAR line item filing instructions (financial interest, signature authority, accounts, trust beneficiaries) · IRS Instructions for Form 8938 (specified foreign financial assets; foreign trust owners; relationship to the FBAR) · IRS FATCA information for individuals · IRS summary of FATCA reporting for U.S. taxpayers | |
Questions and answers
When does the FBAR threshold apply?
The filing threshold applies when the aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year. The account holder or person with relevant authority must also meet the applicable U.S. person and interest or authority conditions.[1]
Does the $10,000 amount apply to each foreign account?
No. The stated threshold is based on the aggregate value of foreign financial accounts. FinCEN says no report is required if that aggregate value does not exceed $10,000.[3]
What kind of authority can create an FBAR reporting obligation?
Signature authority is an individual's authority, alone or with another individual, to control account asset dispositions by direct communication with the institution maintaining the account. The communication can be in writing or otherwise.[5]
When can a trust beneficiary have a financial interest?
A U.S. person has a financial interest in a trust's foreign accounts when they have a greater than 50 percent present beneficial interest in the trust's assets or income for the calendar year.[5]
When is the beneficiary not required to report the trust accounts separately?
The beneficiary is not required to report the trust's foreign financial accounts if the trust, trustee, or trust agent is a U.S. person and files an FBAR disclosing those accounts.
Related resources
Related glossary terms
- 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.
- Financial interest in an account: FBAR rules define financial interest through account ownership or relationships to the legal title holder. A U.S. person named on an account has an interest.
- Signature authority over an account: The FBAR rules define signature authority by the power to direct disposition of account funds through direct communication with the financial institution.
Related articles and guides
- 26 U.S.C. § 679, foreign trusts with U.S. beneficiaries: 26 U.S.C. § 679 sets an ownership rule for foreign trusts with U.S. beneficiaries, defines a U.S. beneficiary and is linked to section 6048 reporting.
- Singapore trust tax rules and U.S. reporting: Singapore's rules for taxing trust income, including trustee and beneficiary shares, with the IRS reporting rules for U.S. persons connected to a trust.
- Section 679 and foreign trusts with U.S. beneficiaries: Section 679 covers ownership treatment, U.S. beneficiaries, transfer exceptions and related reporting rules for foreign trusts connected to U.S. citizens.
Tools and official documents
- FinCEN Report 114 (FBAR): foreign account reporting: FinCEN Report 114 (FBAR) for U.S. citizens: account definitions, financial interests, signature authority, trust provisions and the filing requirements it sets.
- Foreign trust reporting role finder: Tick the roles that describe a connection to a foreign trust or foreign account to see the forms the IRS and FinCEN instructions discuss. Roles can overlap.
Related pages
Sources and data notes
- irs.gov, Report of Foreign Bank and Financial Accounts (FBAR) | Internal Revenue Service. https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar. Retrieved .
- fincen.gov, FinCEN Offers Optional Electronic Filing for FBAR Forms | FinCEN.gov. https://www.fincen.gov/news/news-releases/fincen-offers-optional-electronic-filing-fbar-forms. Retrieved .
- fincen.gov, FinCEN Issues Final Rule on Foreign Bank and Financial Accounts Report (FBAR) Responsibilities | FinCEN.gov. https://www.fincen.gov/news/news-releases/fincen-issues-final-rule-foreign-bank-and-financial-accounts-report-fbar. Retrieved .
- proskauer.com, FinCEN Issues Final Rules on FBAR, Insights, Proskauer Rose LLP. https://www.proskauer.com/alert/fincen-issues-final-rules-on-fbar. Retrieved .
- 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 .
Dates in this block record when each source was read for this page.