Trust property

The Form 3520-A instructions define property broadly and use trust property in rules about foreign trust assets, transfers and distributions, as well as use by U.S. persons.

Meaning in the IRS instructions

The instructions for Form 3520-A define property as tangible or intangible property, including cash, and use trust property for property owned by a foreign trust.^[2]

In this context, the term connects several related concepts. A grantor may create a trust or transfer cash or other property to it. An owner is a person treated as owning trust assets under the grantor trust rules, while a grantor trust is a trust to the extent another person is treated as owning its assets.^[2]

Transfers and ownership

For a foreign trust, the Form 3520-A instructions describe a general U.S. beneficiary rule when a U.S. person transfers property directly or indirectly. The trust generally is treated as having a U.S. beneficiary unless its terms specifically bar distributions to U.S. persons at any time and the trust cannot be amended to allow them.^[2]

An interest can count even when it depends on a future event, and the rule does not depend on an actual distribution in that tax year. Where a person has discretion to distribute trust property, the instructions specify an exception tied to an identified class of recipients, none of whom are U.S. persons during the tax year. Agreements involving the transferor that may result in income or corpus benefiting a U.S. person are treated as trust terms.^[2]

The Form 3520 instructions connect ownership of trust assets with Part II reporting. A U.S. person treated as owner of any part of a foreign trust completes Part II, including when no trust transactions occurred during the tax year. For line 23, the instructions call for the fair market value of assets treated as owned, with liabilities disregarded; if the trust's statement is unavailable, the instructions set a minimum that includes transferred assets.^[1]

Use and distributions

Trust property also matters when a U.S. person uses assets owned by a foreign trust. The instructions treat uncompensated use as a reportable distribution measured by fair market value, whether or not taxable. Any amount paid for the use is accounted for separately in the Form 3520 reporting calculation.^[1]

The terms therefore appear in rules about transfers into a trust, deemed ownership, and property or use received from it.

Questions and answers

What does property mean in the Form 3520-A instructions?

The instructions define property to include tangible and intangible property, as well as cash. The term is used for assets transferred to or owned by a foreign trust.^[2]

Does a transfer to a foreign trust automatically mean it has a U.S. beneficiary?

The instructions state a general rule treating the trust as having a U.S. beneficiary when a U.S. person transfers property to it. They describe exceptions, including specific restrictions on distributions to U.S. persons and limits on amendments.^[2]

How does the IRS treat free use of foreign trust property?

The Form 3520 instructions treat uncompensated use by a U.S. person or related U.S. person as a reportable distribution measured at fair market value. The instructions say this reporting applies whether or not the amount is taxable.^[1]

Where does foreign trust ownership appear on Form 3520?

Part II applies when a U.S. person is considered the owner of any foreign trust assets under the grantor trust rules. The instructions state that this part applies even if there were no transactions involving the trust during the tax year.^[1]

Uncompensated use of trust property: Uncompensated use of foreign trust property by a U.S. person or a related U.S. person is treated as a distribution at fair market value and is reportable.
U.S. beneficiary of a foreign trust: The Form 3520 instructions explain who is a U.S. beneficiary of a foreign trust and how that status relates to distributions and ownership, plus reporting.
U.S. owner of a foreign trust: The Form 3520 instructions define a U.S. owner as a person treated as owning trust assets under grantor trust rules. Ownership can apply to part of a trust.
Section 679: Section 679 addresses certain transfers by U.S. persons to foreign trusts. It treats some property transfers as ownership when the trust has a U.S. beneficiary.

When a Foreign Trust Has a U.S. Beneficiary: A property transfer to a foreign trust generally means it has a U.S. beneficiary. Rules also address trust terms, loans, property use, and transfer reporting.
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.
Section 679 and U.S. Transfers to Foreign Trusts: Section 679 may treat a U.S. transferor as owner of the foreign trust portion tied to transferred property when a U.S. beneficiary may benefit from the trust.

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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.