Technical article

When the Person Who Set Up the Trust Moves Away, Dies or Stops Being a Resident

When the settlor stops being a long-term resident, an exit charge of up to 6% can arise.

By Neil Solomon · 5 min read

Picture a couple who set up a family trust while living in London. Ten years later they retire to Portugal. A few more years pass, and one of them dies. This is an example, not a real family. What changes for the trust if the settlor leaves, and what changes at death?

The answer depends on the country the settlor came from. Here is what the sources say for six.

Leaving

United Kingdom. From 6 April 2025, inheritance tax follows long-term residence: the settlor has lived in the UK for 10 of the last 20 tax years. Leaving does not end it. The tail is 3 years for 13 or fewer years of residence, then one more year for each further year, up to 10 years at 20. Within the tail, foreign assets in the trust stay in the net. When the settlor stops being a long-term resident, an exit charge of up to 6% can arise. The trust's own residence follows its trustees, so changing trustees abroad can bring a deemed sale at market value, with capital gains tax of 24%.

Germany. A German citizen who leaves stays an inland taxpayer for inheritance and gift tax for 5 years, if there is no German home. A shareholder with 1% or more is taxed as if the shares were sold, if resident 7 of the last 12 years. The tax can be paid in seven yearly instalments and lapses on return within seven years. Moving to a low-tax place can also keep German-source income taxable for up to 10 years.

Canada. A person who stops being resident is generally taxed as if most property was sold at market value; the tax is due by 30 April the next year. A trust that ceases to be resident is treated as selling its capital property at market value. While a contributor lives in Canada, a trust abroad is treated as Canadian under section 94.

Australia. A resident who sends property to a non-resident trust, including by creating it, can be taxed on the trust's attributable income under the transferor rules. That exposure runs while the settlor is resident.

United States. If a death, resignation or move of a person who holds a substantial power would change the trust's status, there are 12 months to fix it and keep the old one.

France. If settlor and heir both live abroad, only French assets are reached. An heir who has lived in France 6 of the last 10 years brings worldwide assets in.

At death

France taxes the trust assets themselves. At the settlor's death, trust assets are taxed at 45% where descendants share them jointly, and at 60% in other cases, or where the settlor lived in France when the trust was set up after 11 May 2011. Assets held less than a year before death are presumed to be in the estate. The administrator pays.

United Kingdom. An irrevocable trust is mostly outside the estate. The exception is a gift with reservation, where the settlor kept a benefit; that comes back into the estate at 40%. A life tenant's death in an interest-in-possession trust also brings 40%.

United States. Property comes back into the estate if the settlor kept the income or the right to say who enjoys it. The 2026 exclusion is US$15,000,000 per person, at 40% above. An irrevocable trust outside the estate gets no step-up in cost for the heirs.

The table shows how Germany, Canada and Australia treat death.

Who it touches

A surviving spouse. Children in several countries. The executor, who may file in more than one place. A trustee, who may have to report a change of residence.

If you have moved countries with a trust behind you, which date surprised you most? Share it here. Someone planning a move may be glad to know.

Figures are estimates for planning, based on public data. Date read: October 2026.