Looking for Mr. FBAR.

The regulation does not work that way. It imposes the duty on each United States person independently, and more than one person can owe a report on the same account in the same year. Virginia La Torre Jeker’s durable primer on the question — Looking for Mr. FBAR: When Does a Trust Have a Duty to File?, Bloomberg Tax (Feb. 21, 2022) — remains the clearest statement of the problem, and its analysis has not been overtaken. What follows maps the rules onto the structures we build.

The single most common conceptual error is to treat the FBAR as a tax form. It is not. The reporting duty arises under the Bank Secrecy Act in Title 31 of the United States Code, implemented by the FinCEN regulations, and it is administered on a separate track from the Internal Revenue Code. 31 U.S.C. § 5314; 31 C.F.R. § 1010.350. The information returns that a foreign trust and its United States owners and beneficiaries may also owe — Forms 3520 and 3520-A — live in Title 26 and answer to different definitions, different deadlines and different penalty regimes.

That distinction has a hard practical edge. A trust formed under the law of a United States state is a United States person for FBAR purposes, and can owe a report on its foreign accounts, even where it is treated as foreign or as a disregarded entity for income tax purposes. Jeker, supra (a trust formed under U.S. state law is a United States person for FBAR purposes even where treated as foreign for income tax purposes, and the trust itself is a United States person even when disregarded for tax compliance). A structure can therefore be foreign for one federal purpose and domestic for another in the same year. Whether an entity is a “United States person” for FBAR purposes must be answered under the Title 31 rules, not by importing a tax characterisation.

The core obligation is short. Each United States person having a financial interest in, or signature or other authority over, a bank, securities or other financial account in a foreign country must report that relationship for each year in which it exists. 31 C.F.R. § 1010.350(a) (“Each United States person having a financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country shall report such relationship to the Commissioner of Internal Revenue for each year in which such relationship exists ….”). The familiar $10,000 aggregate threshold and the annual filing mechanics sit in the implementing filing rules and the FinCEN Form 114 instructions rather than in the definitional section, and the report is filed electronically with FinCEN, not with an income tax return. See 31 C.F.R. § 1010.306(c) and the current FinCEN Form 114 instructions (aggregate value exceeding $10,000 at any time during the calendar year; annual electronic filing with FinCEN).

Two words carry all the weight.

Financial interest. The most obvious case is ownership of record or holding of legal title. Where a trust is the owner of record or the holder of legal title to a foreign account, the trust has a financial interest in it — the fact that the trust holds the account for beneficiaries does not displace that. Beyond title, the regulation attributes a financial interest in two situations that matter to almost every structure we advise on:

Signature or other authority. This is defined as the authority of an individual, alone or together with another, “to control the disposition of money, funds or other assets held in a financial account” — typically by direct communication with the institution. 31 C.F.R. § 1010.350(f)(1). It has nothing to do with ownership. An individual with no beneficial interest whatsoever can owe a report because he can move the money.

Consider a family arrangement of the sort this series discusses constantly: a discretionary trust holding an account at a foreign bank, with a corporate trustee, a settlor who is a United States person, several beneficiaries, an investment adviser with trading authority, and a protector.

Walk each seat:

• The trust. If it is a United States person for FBAR purposes and is the owner of record or holder of legal title, it has a financial interest and files in its own right.
• The settlor. If the trust is a grantor trust as to him for federal tax purposes — a common result where powers were retained for tax reasons — the regulation attributes to him a financial interest in the trust’s foreign accounts. Note the irony: the retained powers that support grantor-trust status are the same powers that, taken far enough, imperil the trust under the reasoning of Webb v Webb. Webb v Webb (Cook Islands) [2020] UKPC 22 (3 August 2020), at [89] (retained bundle of rights “indistinguishable from ownership”). The reporting consequence is one more reason to be deliberate about which powers are kept and why.
• The beneficiaries. A beneficiary with a present beneficial interest in more than half of the assets, or who receives more than half the current income, has an attributed financial interest. A member of a genuinely discretionary class ordinarily has neither — which is one of several respects in which discretionary structures behave differently from fixed ones. The analysis is annual, and it can change with a single large distribution.
• The trustee and its officers. A trustee that is a United States person has a financial interest as legal titleholder. Individual officers or employees who can direct the disposition of funds have signature authority in their own right, subject to the regulation’s specific exceptions.
• The investment adviser. Authority to direct trades or transfers is exactly what paragraph (f) describes.
• The protector. This is the seat most often overlooked. The answer depends entirely on the powers actually held. A protector whose role is limited to consenting to trustee proposals does not, by that fact alone, control the disposition of funds. A protector who can direct payments, or who effectively controls the trustee, is in materially different territory. The question has become more pointed since the Privy Council confirmed in 2026 that a fiduciary protector’s consent power carries a genuine, independent discretion rather than a formality. A and 6 others v C and 13 others (Bermuda) [2026] UKPC 11 (19 March 2026), at [94], [119].

The regulation also contains limited relief so that the same account is not reported by everyone connected to it — including a provision relieving certain trust beneficiaries where a United States trust, trustee or agent files the report covering the account. That relief is specific and conditional, and it should be confirmed against the regulation and the current instructions rather than assumed. See 31 C.F.R. § 1010.350(g) (special rules, including relief for certain trust beneficiaries where a United States trust, trustee or agent files the report) and the current FinCEN Form 114 instructions.

There are three reasons this belongs in a series about asset protection rather than in a tax newsletter.

Reporting exposure is real exposure. The FBAR penalty regime is severe: a non-wilful penalty per annual report, and a wilful penalty measured as the greater of a statutory floor or half the account balance. 31 U.S.C. § 5321(a)(5); Bittner v. United States, 598 U.S. 85 (2023) (non-wilful penalty applies per report rather than per account). A revenue claim of that magnitude can dwarf the commercial claim the structure was built to withstand, and the government is the least tractable creditor there is. The point sharpened this summer: the IRS removed the Delinquent FBAR Submission Procedures — the one documented, guaranteed penalty-free route back into compliance — from its website on or about 1 July 2026, leaving discretionary alternatives in its place. Virginia La Torre Jeker, IRS Quietly Ends Penalty-Free FBAR Filing Procedure: What’s Next?, Forbes (July 2, 2026); Michael Steffany, IRS signals major changes to FBAR compliance and penalty relief programmes, Charles Russell Speechlys (July 17, 2026).

Silence looks like concealment. When a creditor argues that a structure is a sham or that the settlor retains control, the settlor’s credibility is the defence. Years of unfiled reports on the very accounts in dispute are the last thing a settlor wants an opposing lawyer to read out. Disclosure is a feature of legitimate planning; the absence of it is one of the badges courts weigh.

Filing duties are a design output. Who files is determined by who has title, who is treated as owner for tax purposes, who has more than half the beneficial interest, and who can move the money. Every one of those is a choice made when the structure is drafted. They should be recorded in a filing map at formation, assigned to named people, and revisited whenever the trust, the trustee or the distribution pattern changes.

The discipline here is the same discipline that makes protection work everywhere else in this field: decide in advance, document it, and do it the same way every year. A trust that is seasoned, irrevocable, independently administered and correctly reported is defensible from every direction. A trust with an immaculate deed and a missing Form 114 is not.

This note is general commentary for information only and is not legal or tax advice. FBAR obligations turn on the specific structure, the powers actually held, and the facts of each year; the regulation, the current FinCEN Form 114 instructions and qualified counsel should be consulted in every case. The law is stated as of September 2026.