Wayne Michigan Qualifying Subchapter-S Revocable Trust Agreement

Name: Wayne Michigan Qualifying Subchapter-S Revocable Trust Agreement
Brand: US Legal Forms
Rating: 4.76 (350 reviews)

Category:

Trusts - Revocable

State:

Multi-State

County:

Wayne

Control #:

US-0687BG

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Instant download

Description

Qualified Subchapter S trusts (QSSTs) can provide taxpayers with substantial income tax and estate tax savings. QSSTs are different than other S corporation trusts in that the beneficiary is usually someone other than the grantor of their estate.

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How to fill out Wayne Michigan Qualifying Subchapter-S Revocable Trust Agreement?

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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.

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.

You can put your S-Corp into your living trust by simply transferring your shares ownership to yourself as trustee of your living trust, but again, there are certain procedures that must be strictly followed....These trusts include: Electing small business trusts (ESBT) Grantor trusts. Qualified subchapter S trusts (QSST)

The benefit of a QSST from a tax perspective is that the income beneficiary is treated as the deemed owner over the portion of the trust that consists of stock in the S corporation. This means that the trust's allocable portion of the S corporation income is reported directly by the beneficiary.

The fundamental problem is that trusts and S corporations do not play well together. 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.

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.

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.

Testamentary trusts. This trust type is established by your will. It's an eligible S corporation shareholder 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.

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 (

As an initial matter, as long as the business owner is living, his or her revocable trust is treated as a grantor trust for income tax purposes, and as such, is an eligible S corporation shareholder.

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L. Qualified Subchapter S Trust (QSST) . This book was written to help fill the need for a survey of law for the non-lawyer.

Wayne Michigan Qualifying Subchapter-S Revocable Trust Agreement

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FAQ

How do I file a QSST election?

What is a qualified Subchapter S trust QSST?

How do I transfer my S Corp shares to a trust?

What is the benefit of QSST?

Can you put an S Corp into a trust?

Can S Corp be own by irrevocable trust?

What is difference between ESBT and QSST?

What type of trust can be an S Corp shareholder?

Can a trust own a Scorp?

Can an S corp be owned by a revocable trust?

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