loubiblu

Think the poster is referring to a scheme introduced in 2002, where every child was given £500 for the parent to invest in a Child Trust Fund, with access once the child is 18. Parents and grandparents were encouraged to 'top up' the fund to a maximum each year too. An additional government payment was received after 7 years. Lower income families got more than the universal £500. https://www.gov.uk/child-trust-funds/overview

Cook_County

Apologies if my post was unclear, but looking at the age of the child and the .gov website it is highly likely that there is a UK government funded child trust fund. loubiblu's link and thinking is correct.

Pulaski

Ah, OK. That was after I left, and didn't have a child at the time either.

BunnyGirl

Yes, he does have a child trust fund (sure we only got a voucher for £250 though, they were starting to cut back before it stopped).

I did call them a little while ago about what would happen to this account when my son's 18 if we're still in the US. However, they couldn't help as, because the scheme only started in 2002, nobody who has an account has reached 18 yet so they're not sure what's going to happen...

Cook_County

From a US perspective this is probably a foreign trust owning PFICs requiring annual tax return filing of Form 3520-A by the trust and Form 3520 by you; annually. These are simply informational returns but if you want to be whiter than white you may wish to ensure these are filed every year.

JAJ

Probably? Really?

There is absolutely no evidence that the IRS - at least, in the real world - sees these investments as anything other than bank accounts.

All this discussion about PFIC, trusts, etc. makes for interesting theory but appears more like scaremongering.

nun

I believe that the child's trust fund would be treated just like an ISA......so no tax free status and the US will tax the underlying investment. So if it's invested in a unit trust it's a PFIC, if it's in a savings account it's just a bank account.

BunnyGirl

I think this is right as, because my son has this child trust fund, he's not allowed to hold a junior ISA.

nun

HMRC rules have nothing to do with how the IRS will act. The trust fund, ISA etc have no meaning to the IRS. They will simply look at the investments and tax them according to IRS regulations. They will have all the issues and complications of foreign investments.

vtcarter6

Sorry, what are general guidelines for making UK (or any foreign) account set-up IRS-friendly? We are moving to the US in a month and will have a somewhat complicated financial scenario (my husband also has a pension and accounts in France, where he is from).
Is it just a matter of transfer anything that makes sense to do so to the US, and consolidate the rest into as few accounts as possible?

nun

You must avoid foreign pooled investments ie anything like a mutual fund. Investments other than bank accounts and individual shares can get complicated, but those don't pose any bad tax consequences, just remember to pay US tax on any gains, file the required disclosure documents and make sure you comply with any French tax requirements and claim foreign tax credits on you US taxes. I would transfer as much as is sensible to the US to make your life simple.

The US/France tax treaty is substantially different from the UK one and while it covers pensions in some detail I would get some advice from a French forum or expert as to how to deal with a French pension.

vtcarter6

Ok. I've asked the following question on BE a while back and the answer I got (keep accounts and esp pensions where they are) didn't totally make sense to me. Financially I'm clueless, taxwise even more so.

So if I'm a USC, husband is French, we're moving to US for hopefully the long term...we're not leaving behind any family or strong ties to the UK. Wouldn't it be best for us to aim to only have accounts in the US and France? (If we ever left the US, it would likely be to go to France)

Which leads to second question...should/can we move husband's UK pension into his French one? I know this can get complicated trying to move pensions to US, but is it any simpler between European countries?

Thanks.

theOAP

If the response you received didn't make sense, it's probably my fault. I do remember your previous query.

If you never intend to return to the UK, then moving everything possible out of the UK would seem to make sense. If I remember correctly, you also have a small pension in the UK. I also vaguely remember you do not have any EU citizenship (UK or France) at this time.

If it wasn't clear last time, let me phrase it in somewhat stronger terms this time.

You are married; you have both lived in the same countries while working (IIRC); you have similar pensions to your husband (maybe not French though); you are going to live in the US together; you may not stay there forever. All of this means nothing to your separate situations!!!!

At present, you have different nationalities. What you must be concerned about is different from what your husband must be concerned about.

Much depends on the 'possible' return to France in the future. If it seems unfair to have to plan your life now for what may be a situation in 40 years in the future; welcome to the world of the global expat.

Your situation is fairly straightforward and the information on this site (or UK Yankee) regards an American with UK assets and accounts returning to the US to never return to the UK is well documented. You have reporting responsibilities because you are a US Person for tax purposes.

Your husband needs to view his position differently. He has assets in France, and not only will he have to be aware of US tax policy if he moves there, but also French tax policy and the future value of those assets IF he returns to France. French pensions are valuable assets IF he returns to France.

What type of pensions does he have? Company? CNAV (State)?

It's only my opinion, but I believe he should not do anything regards his French pensions. They will come good in time, whether you eventually return to France or not. Can he transfer assets from his UK pension to to his French pension? I don't know, but it will depend greatly on the type of French pension. My guess is no, but it may depend on how his French pension is held. Perhaps someone on this site in the EU (France) section may be able to help.

France - British Expats

Your husband may find the following PDF of interest. It's from the fisc, and details his obligations of being a French national, or someone with French sourced income, living outside of France. If you move to the US, note the next to last page on the French view of international tax treaties, and what must be reported to France when distribution occurs.

http://www.impots.gouv.fr/portal/dep...ptive_5117.pdf

You do not have a straightforward situation. Please understand this is not meant to be harsh, but you will have to make an effort to comprehend the ramifications of being in a multi-national marriage with obligations for multi-national taxation. You have my sympathies (or encouragement, if you like). I can attest it takes an additional effort when a US tax situation is involved.

vtcarter6

Ah, thanks so much for the thoughtful and detailed reply. I understand we probably need to get a professional with an understanding of international tax issues on board. As always, this forum has been a lifesaver for me in building awareness of potential issues...even if there's no easy fix for them, being prepared for them.

BunnyGirl

As Nun says, I'm moving everything that I can over to the US (not that this is much for me!) and only leaving in the UK the things that I have to (e.g. my frozen pension).

It is very complicated though and it might be useful for you to have a chat with a competent tax accountant in the US to understand what might work best for you both.