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Ask a Lawyer -- Corporations
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Brought to you by MedLawPlus.com®-- Corporate Bylaws and initial board of directors resolution Price: $14.99 (free trial) |
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Question: When the officers of an S Corporation put their shareholder stock into the name of their living trust what is the benefit? Response: The principal advantage is avoiding the need to probate the shares upon the death of the owner. The revocable living trust continues on and becomes irrevocable at the death of the settlor. Further, a revocable trust is known under the tax laws as a grantor trust meaning that all income of the trust is taxed to the settlor. Thus, this arrangement preserves one level of taxation. As an aside, one has to be careful about making trusts as S corporation shareholders. The trust must be a Qualified Subchapter S trust or Electing Small Business Trust. Submitted: 02/22/2009; Pat, California Response: 02/22/2009; JJR Add A Comment |
Ask a Lawyer, Corporations Archives
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