Court test

The IRS regulations describe the court test as one part of deciding whether a trust is a U.S. person. The term concerns a U.S. court's authority over trust administration and works alongside the control test.

Definition and place in the rules

The IRS regulations define the court test by whether a court within the United States is able to exercise primary supervision over a trust's administration. A trust is a U.S. person for any day it meets both this test and the separate control test.^[3]

The regulations say the trust instrument and applicable law determine whether the two tests are met. The court test addresses court authority; the control test addresses who has authority over all substantial decisions. A trust meeting both is a domestic trust, while any other trust is foreign under this definition.^[3]

This classification appears in reporting rules for foreign trusts.

How court authority is assessed

The regulations define a court to include a federal, state, or local court. For this test, the United States means the states and the District of Columbia, so a court in a U.S. territory or possession does not count as a court within the United States.^[3]

A court is able to exercise authority when applicable law gives it power to issue orders resolving trust administration issues. Primary supervision means authority over substantially all issues for administration of the entire trust. Another court's jurisdiction over a trustee, beneficiary, or trust property does not by itself prevent primary supervision.^[3]

Administration covers carrying out duties under the trust instrument and applicable law. Examples include maintaining records, filing returns, managing and investing trust assets, and determining distribution amounts and timing.^[3]

Safe harbor and specified situations

A trust meets the regulatory safe harbor when its instrument does not direct administration outside the United States, it is in fact administered exclusively in the United States, and it has no specified automatic migration provision. The rule therefore ties the safe harbor to both the written terms and actual administration.^[3]

The regulations also identify situations in which the test is met. These include qualifying registration in a U.S. court, a will-created trust with all fiduciaries qualified by a U.S. court, and an inter vivos trust whose fiduciaries or beneficiaries take steps making its administration subject to that court's primary supervision. The list is expressly nonexclusive.^[3]

If both a U.S. court and a foreign court can exercise primary supervision, the trust meets the court test. A separate rule addresses an automatic migration clause. If court assertion or supervision would trigger migration from the United States, a U.S. court is not treated as having primary supervision. The rule has an exception for migration only upon foreign invasion or widespread confiscation or nationalization of property in the United States.^[3]

Connection to U.S. person reporting

The court test classifies the trust; the control test remains an independent requirement for domestic trust status. Separate rules may apply to U.S. persons treated as owners or beneficiaries of a foreign trust, or receiving distributions.^[7]

Questions and answers

What does the court test measure?

It measures whether a court within the United States can exercise primary supervision over trust administration. That means authority over substantially all administration issues for the entire trust.^[3]

Which courts count as U.S. courts for this test?

The regulations include federal, state, and local courts. Geographically, the test includes courts in the states and the District of Columbia, but excludes courts in U.S. territories or possessions.^[3]

Does the court test alone make a trust domestic?

No. The trust must also meet the control test, under which one or more U.S. persons have authority over all substantial decisions. A trust is a U.S. person on days it meets both tests.^[3]

Can a trust meet the court test if a foreign court also has authority?

Yes. The regulations state that a trust meets the test if both a U.S. court and a foreign court can exercise primary supervision over its administration.^[3]

What is the safe harbor for the court test?

The instrument must not direct administration outside the United States, the trust must actually be administered exclusively in the United States, and no specified automatic migration provision may apply.^[3]

How does this classification relate to IRS reporting rules?

The IRS identifies Forms 3520 and 3520-A among information reporting rules that can apply in foreign trust situations. Reporting rules can apply when a U.S. person transacts with a foreign trust, is treated as its owner, or receives a distribution.^[7]

Domestic trust: The IRS defines a domestic trust through its court test and control test, and the term appears in U.S. foreign trust reporting rules for U.S. citizens.
Foreign trust classification: A trust is foreign under Form 3520 when it fails either domestic trust test. The tests ask about U.S. court supervision and control of substantial decisions.
Control test: The control test is part of the IRS rules for classifying trusts as domestic or foreign. It describes whose authority over substantial decisions counts.
Substantial decisions: Substantial decisions under a trust include nonministerial choices about distributions, beneficiaries, income, principal, trustee changes, and investments.

The court and control tests for foreign trusts: The court test and the control test classify a trust as domestic or foreign, and foreign trust status connects to U.S. reporting rules for U.S. citizens.
Tax planning and compliance for foreign trusts: U.S. rules classify trusts and assign tax and reporting duties to U.S. citizens connected with foreign trusts, including forms, filing calendars and records.
Section 6048 reporting for certain foreign trusts: Section 6048 foreign trust reporting for U.S. citizens, including definitions and reportable events, as well as ownership and distributions and the IRS forms.

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Sources and data notes

Internal Revenue Service, Instructions for Form 3520. https://www.irs.gov/instructions/i3520. Retrieved 2026-10-15.
Internal Revenue Service, Instructions for Form 3520-A. https://www.irs.gov/instructions/i3520a. Retrieved 2026-10-15.
Internal Revenue Service, 26 CFR 301.7701-7 Trusts, domestic and foreign. https://ecfr.io/Title-26/Section-301.7701-7. Retrieved 2026-10-15.
Internal Revenue Service, 26 CFR 301.7701-4 Trusts. https://www.ecfr.gov/current/title-26/section-301.7701-4. Retrieved 2026-10-15.
Internal Revenue Service, 26 U.S.C. 679. https://uscode.house.gov/us/usc/119-118/t26/s679/. Retrieved 2026-10-15.
Internal Revenue Service, 26 U.S.C. 6048. https://uscode.house.gov/us/usc/119-118/t26/s6048/. Retrieved 2026-10-15.
Internal Revenue Service, Foreign trust reporting requirements and tax consequences. https://www.irs.gov/businesses/international-businesses/foreign-trust-reporting-requirements-and-tax-consequences. Retrieved 2026-10-15.

Dates in this block record when each source was read for this page.