The Harris Texas Irrevocable Trust, also known as a Qualifying Subchapter-S Trust, is a legal arrangement established in Texas that holds and manages assets for the benefit of its beneficiaries. This type of trust offers various benefits, such as tax advantages and protection of assets. It is crucial to understand the different types of Harris Texas Irrevocable Trusts that fall under the Qualifying Subchapter-S category. Here are some types: 1. Revocable Living Trust: This type of Harris Texas Irrevocable Trust allows the granter to maintain control over the assets during their lifetime. It becomes irrevocable upon the granter's death, offering benefits such as probate avoidance and flexibility in managing assets. 2. Special Needs Trust: A Harris Texas Irrevocable Trust designed specifically for beneficiaries with disabilities or special needs. It helps ensure government benefit eligibility while providing supplemental support. 3. Charitable Remainder Trust: By establishing this type of Harris Texas Irrevocable Trust, individuals can donate assets to a charitable organization while retaining the right to income generated by the trust during their lifetime. 4. Life Insurance Trust: This trust is designed to hold life insurance policies, ensuring the proceeds are not subject to estate taxes upon the insured's death. It allows individuals to pass on the life insurance benefits to their beneficiaries more efficiently. 5. Generation-Skipping Trust: A Harris Texas Irrevocable Trust used to transfer assets to beneficiaries that are two or more generations younger than the granter. This trust can minimize estate taxes and provide ongoing financial support for future generations. 6. Grantor-Retained Annuity Trust (GREAT): With this trust, a granter transfers assets into an irrevocable trust while retaining an annuity payment for a specified period. It is a useful tool for minimizing gift taxes and transferring appreciating assets to beneficiaries. 7. Qualified Personnel Residence Trust (PRT): Through a PRT, a granter transfers their primary residence or vacation home into an irrevocable trust while retaining the right to live in or rent the property for a designated period. This trust helps reduce estate taxes and facilitates the transfer of real estate to beneficiaries. In conclusion, the Harris Texas Irrevocable Trust, also known as a Qualifying Subchapter-S Trust, encompasses various types of trusts, each serving different purposes. Whether it's for asset protection, tax planning, or preserving wealth for future generations, understanding the different types of trusts available under the Harris Texas Irrevocable Trust framework can help individuals make informed decisions regarding their estate planning.
Harris Texas Irrevocable Trust which is a Qualifying Subchapter-S Trust
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An irrevocable grantor trust can own S corporation stock if it meets IRS regulations. The trust must contain language stating that all the ordinary income the trust earns along with the original trust assets are owned by the trust grantor.
For example, if a trust is a grantor trust to one individual, it is eligible as an S corporation shareholder, even though it is irrevocable (rather than revocable).
A trust can hold stock in an S corp only if it (1) is treated as owned by its grantor for income tax purposes under us grantor trust rules, (2) was a grantor trust immediately before its grantor's death (the trust can be a shareholder only for two years from that date), (3) received stock from the will of a decedent (
A trust can hold stock in an S corp only if it (1) is treated as owned by its grantor for income tax purposes under us grantor trust rules, (2) was a grantor trust immediately before its grantor's death (the trust can be a shareholder only for two years from that date), (3) received stock from the will of a decedent (
An irrevocable trust that is setup as a grantor trust, qualified subchapter S trust or as an electing small business trust may own shares of an S corporation.
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.
In this way, the TAI related to the S corporation stock can be distributed while allowing the income from the other interests and assets to continue to be accumulated inside a trust. Under this scenario, the subtrust would elect QSST status, while the original trust could continue to be a complex trust.
TRUSTS COMMONLY USED TO HOLD S CORPORATION STOCK Three commonly used types of ongoing trusts qualify as S corporation shareholders: grantor trusts, qualified subchapter S trusts (QSSTs) and electing small business trusts (ESBTs).
To obtain relief, the trustee of an ESBT or the current income beneficiary of a QSST must sign and file the appropriate election form, which must include the following statements: A statement from the trustee of the ESBT or the current income beneficiary of the QSST that includes the information required by Regs.
Although a trust (including a Living Trust) can be a permitted shareholder in an S corporation, only certain kinds of trusts are so permitted under Section 1361 of the Internal Revenue Code.