A New Hampshire Irrevocable Trust is a legal arrangement created under New Hampshire state law, which carries out specific purposes defined by the creator (also known as the granter or settler). It is considered a Qualifying Subchapter-S Trust (SST), meaning it meets certain requirements to be eligible for tax treatment as a Subchapter S Corporation (S-Corp). This type of trust offers various benefits to individuals and businesses, granting them flexibility in terms of managing and distributing assets while enjoying certain tax advantages. One type of New Hampshire Irrevocable Trust is the SST for Individuals. This trust is primarily created by an individual (granter) to transfer their personal assets into a trust, taking advantage of the limited liability protection and potential tax benefits associated with the Qualifying Subchapter-S status. With this trust, the granter still maintains control over their assets while potentially removing them from their taxable estate. Another type is the SST for Business Entities. This trust is established by business owners (granters) who desire to achieve the benefits of a Qualifying Subchapter S Trust for their business assets. It enables businesses to separate their assets from personal properties, protects against certain liability risks, and potentially provides significant tax advantages. By placing business assets into this trust, owners can continue to manage and operate their businesses while enjoying the tax pass-through benefits of an SST. Furthermore, some variations of the New Hampshire Irrevocable Trust as a Qualifying Subchapter-S Trust may include special provisions or specific focus areas tailored to unique circumstances. For example, a Charitable SST might be established by individuals who want to combine the benefits of tax advantages with philanthropic goals. This particular trust allows the granter to transfer assets for the sole purpose of benefiting charitable organizations, helping to provide financial assistance to causes they support. Overall, New Hampshire Irrevocable Trusts that qualify as Subchapter S Trusts provide compelling advantages in terms of asset protection, tax planning, and control, making them an attractive option for both individuals and businesses in New Hampshire. Understanding the different types of trusts available can help individuals and business owners choose the one that best suits their specific objectives and financial circumstances.
New Hampshire Irrevocable Trust which is a Qualifying Subchapter-S Trust
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A Qualified Subchapter S Trust, commonly referred to as a QSST Election, or a Q-Sub election, is a Qualified Subchapter S Subsidiary Election made on behalf of a trust that retains ownership as the shareholder of an S corporation, a corporation in the United States which votes to be taxed.
Designing a QSSTThe trust must have only one income beneficiary during the life of the current income beneficiary, and that beneficiary must be a U.S. citizen or resident;All of the income of the trust must be (or must be required to be) distributed currently to the one income beneficiary;More items...?
Testamentary trusts. These trusts, which are established by your will, are eligible S corporation shareholders for up to two years after the transfer and then must either distribute the stock to an eligible shareholder or qualify as a QSST or ESBT.
An irrevocable trust cannot be changed or modified without the beneficiary's permission. Essentially, an irrevocable trust removes certain assets from a grantor's taxable estate, and these incidents of ownership are transferred to a trust.
Irrevocable trusts are often set up as grantor trusts, which simply means that they are not recognized for income tax purposes (all of the income tax attributes of the trust, such as income, loss, gains, etc. is passed on to the grantor of the trust).
An irrevocable trust is simply a kind of trust that cannot be changed or canceled after the document has been signed. This sets it apart from a revocable trust, which can be altered or terminated and only becomes irrevocable when the trust maker, or grantor, dies.
The main difference between an ESBT and a QSST is that an ESBT may have multiple income beneficiaries, and the trust does not have to distribute all income. Unlike with the QSST, the trustee, rather than the beneficiary, must make the election.
Since a revocable trust is not treated as separate from the grantor, it is an eligible S corporation shareholder while the grantor is alive.
If a trust is not one of the trusts specifically authorized by the Internal Revenue Code, however, and becomes a shareholder, the Corporation ceases to be a qualified S corporation and will be taxed as an ordinary C corporation.
An irrevocable trust describes a trust that cannot be modified after it is created without the beneficiaries' consent. A trust is a separate legal entity a person sets up to manage their assets.