Rentista passive income through irrevocable trust?

[Lienohi]

Hi all,

Arriving to BA next month and in process of getting all my paperwork in order to successfully obtain a rentista visa.

My question is regarding whether or not an irrevocable trust that makes disbursements of $2500 for the next 12 months would be accepted as satisfactory for passive income requirement?

I also have a private business I own in the USA which I suppose I could receive dividend payments from however this seems more complex, I am looking for bulletproof guaranteed income so I don’t hit any hurdles with this requirement.

Any input or advice most welcome

 

[Ceviche]

disbursements of $2500 for the next 12 months would be accepted as satisfactory for passive income requirement?

yes, it will

get a accountant statement legalized and apostilled

 

[steveinbsas]

Search results for query: IRREVOCABLE TRUST

baexpats.org

 

[Lienohi]

disbursements of $2500 for the next 12 months would be accepted as satisfactory for passive income requirement?

yes, it will

get a accountant statement legalized and apostilled

Thank you. Regarding the “legalization” from an accountant. What does that process look like exactly? Do you happen to know what the accountant verifies as a process of this “legalization”? Making sure the trust was setup with post tax money?

 

[steveinbsas]

get a accountant statement legalized and apostilled

The term "legalize" does not apply when getting the apostille.

A doc which originates in Argentina may be legalized

In order for any doc to receive the apostille it must be signed and notarized in the country in which it orignates.

Whoever sets up the trust (lawyer, bank officer or accountatnt) would be able to write a cover letter which explains the purpose and exact terms of the trust, a copy of which should be mentioned in and attached to the cover letter which shold be signed and the signature notarized. Then it would be able to receive the Apostille and then translated into Spanish and the translation legalized in Argentina.

Additionally, an accountant or a bank officer could write a cover letter for the bank statements which show deopsits and distributions from the trust account. The signed and notarized cover letter should be attached to the bank statements and then can receive the Apostille and then be translated in Argentina and the translation be legalized here, too.

You will probably pay the least if you can have it all done at a bank and avoid paying an attorney or an accountat for anything.

I created everything from scratch when I developed the strategy of using an irrevocable trust to gain temporary residency in 2006. If others had previously done so, I was not aware of them.

The bank officer never charged me to write the letters (updated annually until I received permanent residency in 2009), but i actually wrote the text of the letters and she wrote them on stationery which included the bank's letterhead.

The trust wyhich poriudced the monthly income for my tempoorary residency in Argentina had already been in effect for more than six years in 2006, so I had to use the lawyer to get the cover letter for it. She wrote exactly what I asked her to...but not for free.

PS: It is important to keep n mind the difference between a cover letter and a statement.

An accountatnt can make a "statement" about the details (terms) of the trust, but that is not the same as a bank statement which reveals the data. The signed and notarized cover letter by either an accountant or a bank officer can receive the apostille and, in either case, should specifically refer to any attachments.

 

[Lienohi]

The term "legalize" does not apply when getting the apostille.

A doc which originates in Argentina may be legalized

In order for any doc to receive the apostille it must be signed and notarized in the country in which it orignates.

Whoever sets up the trust (lawyer, bank officer or accountatnt) would be able to write a cover letter which explains the purpose and exact terms of the trust, a copy of which should be mentioned in and attached to the cover letter which shold be signed and the signature notarized. Then it would be able to receive the Apostille and then translated into Spanish and the translation legalized in Argentina.

Additionally, an accountant or a bank officer could write a cover letter for the bank statements which show deopsits and distributions from the trust account. The signed and notarized cover letter should be attached to the bank statements and then can receive the Apostille and then be translated in Argentina and the translation be legalized here, too.

You will probably pay the least if you can have it all done at a bank and avoid paying an attorney or an accountat for anything.

I created everything from scratch when I developed the strategy of using an irrevocable trust to gain temporary residency in 2006. If others had previously done so, I was not aware of them.

The bank officer never charged me to write the letters (updated annually until I received permanent residency in 2009), but i actually wrote the text of the letters and she wrote them on stationery which included the bank's letterhead.

The trust wyhich poriudced the monthly income for my tempoorary residency in Argentina had already been in effect for more than six years in 2006, so I had to use the lawyer to get the cover letter for it. She wrote exactly what I asked her to...but not for free.

Thank you very much Steve, I’ve been reading through countless posts from you and want to thank you sincerely for all the contributions you make to fellow expats on this forum.

I would be setting up this trust for the sole purpose of obtaining a rentista visa.

1) When you went through this process (or if you’ve heard otherwise since) is there any stage in the application process where they request documentation that indicates the funds being used are post tax? Reason being, is I’m in the process of late filing taxes from previous years. Just trying to make sure I don’t get all this work done then come to find out I need to provide a recent tax return filing (which I don’t have presently).

2) What $ amount would you suggest I put into the trust to 100% cover and account for any peso/dollar fluctuations as it relates to required monthly income distributions. Trying to avoid a situation where I finalize the trust and the monthly payments end up falling slightly short per month to meet the requirements for rentista income.

3) Thank you again for your help, you are a saint!

 

[steveinbsas]

Thank you very much Steve, I’ve been reading through countless posts from you and want to thank you sincerely for all the contributions you make to fellow expats on this forum.

You are most welcome.

1) When you went through this process (or if you’ve heard otherwise since) is there any stage in the application process where they request documentation that indicates the funds being used are post tax?

I never deposited any funds in the trust that produced the monthly income. The income I received from the trust was reported by an accounting firm to the IRS and was subject to ordinary income tax in the USA. I had to pay the accountant to produce the IRS forms every year.

Reason being, is I’m in the process of late filing taxes from previous years. Just trying to make sure I don’t get all this work done then come to find out I need to provide a recent tax return filing (which I don’t have presently).

I did not get the impression that you woud have any need to withdraw funds from the trust to pay back taxes in the USA, only that you do not have tax returns for some previous years to demonstrate to migraciones that you are legally entitled to the funds.

It is obviously an important question for you to know the answer to before you set up the trust or lock up the funds which would only be released to you in monthly installments over the period of a year.

Migraciones never asked for my US tax returns or seemed to care if I had paid an income tax on the funds I was receiving, only that I was actually able to receive the required monthly amout to qualify for temporatry residency (about $750 USD per month in 2006).

I satisfied this requirement with ATM receipts, but that would not be acceptable today.

It looks like the now want the $2000 USD trasferred directly to an Argentine bank each and every month.

2) What $ amount would you suggest I put into the trust to 100% cover and account for any peso/dollar fluctuations as it relates to required monthly income distributions. Trying to avoid a situation where I finalize the trust and the monthly payments end up falling slightly short per month to meet the requirements for rentista income.

The current required monthly amount stated by migraciones is $2000 USD. As far as I know, they are not calculating the income requirement in pesos. Temporary residency is granted for one year and the required monthly amount will not change during that year. If an increase is made during that year, it will apply for the renewal. If you decide to renew you will have to refund the trust and provide updated bank info to migraciones, just like you will have done for the first year.

...so, for the first year, you should fund the trust with at least $24,000 plus any bank and transfer fees which might automatically apply and reduce the monthly total received in Argentina to an amount below $2000 USD. If you can affrod to fund the trust with $30,000 USD, all the better.

I have no information about the costs of setting up the trust account directly with a US bank. It also might be the most cost effective, depending on the amount of the "trustee´s" fees. I really don't think you need a CPA to do this for you and I hope a lawyer isn't necessary, either.

 

[TruchoTango]

As a previous rentista holder, in my experience, the irrevocable trust part is irrelevant. Migraciones wants to know that a) you own an investment that throws off sufficient monthly income to meet the requirement; b) the certainty of that monthly cash flow is very high; and c) said funds are transferred from your account in the US to an Argentine bank account monthly (unfortunately at the official rate).

The investment class matters to Migraciones also. They love to see rentista applicants with rental property. Migraciones also likes other structured investments that can't be easily bought or sold, i.e. low liquidity and/or tradeability. Migraciones isn't fond of common stocks that pay dividends and the like - these can be easily bought and sold.

As a rentista holder, Migraciones never asked me about the legal structure that custodianed my investment (i.e. irrevocable trust). Migraciones was only concerned with the above three factors I mention.

 

[Alby]

I agree. Although perhaps they ought to be interested in whether or not the income you demonstrate is liable to (and will be reduced by) tax in another country, they don’t seem to notice, care, or ask.

Separately, we seem to have fallen into the habit on this board of saying that the income minimum for Rentista is (the equivalent of) US$2000. Why is that? The published requirement is five times the minimum monthly salary. At today’s official exchange rate (365 pesos) and the minimum monthly salary for October (146,000 pesos), someone earning rentista income in US$ would indeed need to be earning exactly US$2000. The minute the official value of the peso drops against the US$ (a major fall is likely, quite soon), the US$ equivalent, in theory, drops. Or does it?

The current situation is anomalous. The exchange rate has held at the current rate for a couple of months, and the minimum monthly salary has only recently increased. In other words, for most of the period since the rule change was introduced, in accordance strictly with the rules, anyone presenting rentista income would have needed to show somewhat less than the equivalent of US$2000.

Does anybody have any confirmed up-to-date information about how Migraciones is applying its new regulations? Are they simply converting every rentista currency amount to US$ and then seeing if it reaches US$2000, even at times when five times the minimum monthly salary converted at the official rate comes to below that amount?

 

[Lienohi]

As a previous rentista holder, in my experience, the irrevocable trust part is irrelevant. Migraciones wants to know that a) you own an investment that throws off sufficient monthly income to meet the requirement; b) the certainty of that monthly cash flow is very high; and c) said funds are transferred from your account in the US to an Argentine bank account monthly (unfortunately at the official rate).

The investment class matters to Migraciones also. They love to see rentista applicants with rental property. Migraciones also likes other structured investments that can't be easily bought or sold, i.e. low liquidity and/or tradeability. Migraciones isn't fond of common stocks that pay dividends and the like - these can be easily bought and sold.

As a rentista holder, Migraciones never asked me about the legal structure that custodianed my investment (i.e. irrevocable trust). Migraciones was only concerned with the above three factors I mention.

Thank you and everyone else @steveinbsas @Alby @Ceviche

@TruchoTango though it certainly doesn’t give me comfort considering what my only real option is —> creating a cash/cash equivalent trust with 30k which I’m happy to make irrevocable if that helps my case (sounds like they don’t really care though). I’d even be willing to bump the trust up to 60k if I knew it would guarantee me getting a visa.

Does anyone think I could get my application denied for the simple fact the trust I’d be using is cash/cash equivalents for the trust (I’m open to having it be other assets/less liquid but then again that would likely defeat the purpose of creating the trust with just enough +a little cushion to cover $2000-$2500/month in payments.

Would hate to spend time and $ likely thousands to have this trust set up + cost to hire an immigration attorney (was planning on this anyway as my Spanish is not very good—to walk me through the in person process to finalize visa application once I land in BA).

Any further suggestions/concerns/input for my situation would be most welcome.