@msosso51 , as I understand the definition of a section 988 transaction and hence the applicability of gain/loss recognition, your grantor trust, constituted under the laws of that Foreign country, is outside the regs of 988. This is more like a personal " savings " type of vehicle. And assuming that this is equivalent in characteristics to a US " Revocable " Trust then it is still your own asset. However, any income may need to recognized.
What I wanted to say is that it matters as to what the trust is for ( its charter ) whether it is domestic or foreign.
Also Treaty conditions may apply.
I am not an expert on Trusts ( domestic ) -- I will refer you to @M-MTax -- he deals with trusts. I deal with international / foreign tax issues.
pk
