Families ask to "bring the trust onshore" when a child is a U.S. person, a bank wants a U.S. trustee, or the settlor has died and the foreign non-grantor trust is about to accumulate income no one wants to explain. Domestication is a legal result, not a product. A trust becomes domestic if, and only if, it meets both the court test and the control test in section 7701(a)(30)(E). Everything else — a new certificate, a Delaware file number, a change of mailing address — is paperwork around those two tests. This note is the architecture. It is not a recommendation to migrate, and it is not tax advice.
The tests themselves are in The Court Test and the Control Test. The practice context is Foreign Trusts. Throwback on amounts accumulated while the trust was foreign is in The Throwback Rule.
Three different legal acts
The first is migration of the same trust. The instrument is amended, or the persons holding power are changed, so that a court in the United States can exercise primary supervision and U.S. persons control every substantial decision. The trustee may need a power to change governing law and situs. A protector who must consent may need to release that consent, or be replaced by a U.S. person, or have the power narrowed until it is no longer a substantial decision. If the deed forbids the change, the trust does not migrate because the family prefers that it would.
The second is decanting. The trustee pays the assets of the foreign trust into a new trust, or into a different existing trust, under a power in the deed or under a statute that actually applies to that trustee. Decanting can be the clean way to leave behind powers that cannot be amended. It can also be a distribution for U.S. tax purposes. If the transferring trust is an FNGT with undistributed net income and the recipient arrangement has a U.S. beneficiary, the tax adviser has to model throwback before anyone signs. Treating decanting as a "continuation" without that model is how a governance project becomes an accumulation distribution.
The third is resettlement. The foreign trust distributes, the family contributes to a new U.S. trust, and the old trust ends or continues empty. That is two transfers, not one amendment. Each has its own reporting under section 6048 if a U.S. person is in the chain, and its own question of whether the distribution carries UNI. It is sometimes the only path the deed allows. It should be named as a distribution, not described as a migration.
What domestication does not do
It does not erase UNI that accumulated while the trust was a foreign non-grantor trust. A distribution of that pre-migration UNI to a U.S. beneficiary can still be an accumulation distribution. Income accumulated after the trust is domestic falls under the domestic-trust rules. The point of migrating before the next large distribution is to stop adding to the foreign UNI pool, not to pretend the old pool was never there. The existing throwback note on this site states the same limit. The tax adviser measures the pool. Counsel does not write it off in a recital.
Domestication also does not, by itself, complete a gift or remove U.S.-situs assets from a non-resident alien's estate. Estate inclusion turns on sections 2036 and 2038 and on situs under sections 2104 and 2105. A trust can become domestic and still hold assets the settlor is treated as owning. See U.S.-Situs Assets Inside a Foreign Trust and When the Foreign Grantor Dies.
The outbound direction is harsher and easier to do by accident. A domestic trust that loses the control test becomes foreign. Section 684 can recognize gain when a U.S. person transfers property to a foreign non-grantor trust. Section 6048 can make the change a reportable event. The cure period in the section 7701 regulations — generally twelve months for an inadvertent loss of U.S. control — is the window, not a reason to wait.
The order of work
Read the deed for who may change trustee, governing law, and protector powers. Inventory UNI with the tax adviser before choosing migration, decanting, or resettlement. Decide who will hold every substantial decision the day after closing, and confirm each of them is a U.S. person. Then re-paper the accounts. A legal opinion that the trust is domestic, sitting on top of a custody agreement that still names the foreign trustee as the only authorized person, is not the structure the bank has. KYC, the resolution, and the deed have to match.
If the reason for the move is a family member becoming a U.S. person, do the reading before that status starts when the calendar allows. See Pre-Immigration Planning and When a Family Member Becomes a U.S. Person. Migration after the fact is still available. It is a smaller set of choices, with more reporting already due.