Completely naked behind my trust

👉 The taxpayer is a beneficiary of a US trust whose settlor is his late father. According to the trust deed, the beneficiaries upon the settlor’s death are the taxpayer and his brother, who is a US tax resident. The trust deed provides for the creation of two sub-trusts, one for each child, with the beneficiaries being the first brother and his descendants for the first sub-trust and the other brother and his descendants for the second. The beneficiaries are entitled to an annual distribution from the trust. The trustees are free to distribute income or capital from the trust. From the age of 30, the beneficiaries receive up to 51% of the trust’s value each year.

Federal judges classify the trust as an Irrevocable Fixed Interest Trust. They then question whether the taxpayer has a status identical to that of a life tenant or a beneficiary of a right of habitation (see 4.2.2). In accordance with the opinion of legal scholars, capitalising the trust's income to determine the taxable wealth in the hands of the beneficiary is the best way to respect the taxpayer's ability to pay (see 6.2).

The judgment is in German. It is a Zurich case.

TF, judgment 9C_677/2024, of 8 September 2025