QUESTION: I have a client who has an Educational Trust in the Cayman
Islands. They want me to set up a bank account for this Trust to pay
routine expenses and provide an accounting of those. My banking
officer wants me to set up the account under my ss# for the benefit
of…. The bank says that setting up the account in the name of the
Trust is much more complicated, they would need Trust docs, etc.

Is there a risk to me that you are aware of in setting up the name
under my ss#? It would be non-interest bearing…

REPLY: My first reaction is to wonder why an educational trust doesn't
have investment assets and investment income -- but I'll assume you
have no problem with the apparent contradiction.

Offhand, it seems that if you are acting as an agent of a foreign
trust who is authorized to write checks for the trust, the IRS might
argue that you are a trustee. But if the trust is going to file the
foreign trust information forms anyway, that doesn't seem to be a
significant cause for concern. It also seems certain that you would be
required to file the foreign financial account disclosure form TD F
90-22.1.

In a worse case situation, I can think of possible claims by the
government that you might be helping to launder money by acting as an
agent for another person/entity. Another possibility is that the
foreign bank may conclude that it is required to report amounts paid
to U.S. persons under the foreign intermediary rules if there was any
income earned in the U.S. (See
http://www.irs.gov/businesses/small/international/article/0,,id=102323,00.html
) But if there is no interest or other income paid to the trust, then
it seems that would not be a significant possibility.

If I were acting on behalf of a trust (foreign or domestic), I would
provide the trust docs and other information required by the bank
rather than putting myself in the middle -- but then I've become a lot
more cautious as the years have gone by.

Perhaps some other members of this group have some specific experience
with acting as an agent of a foreign person or entity.

Vern