Small Business Trusts: Drafting Tax-Advantaged QSSTs and ESBTs, Reconciling Trust and S-Corp Documents

Recording of a 90-minute premium CLE/CPE webinar with Q&A

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Conducted on Tuesday, July 7, 2015

Recorded event now available

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Course Materials

This CLE/CPE course will provide tax counsel and family office advisers with the understanding and tools to implement best practices in drafting trust documents in anticipation of trust ownership of closely-held businesses, as well as integrating the operating documents of those businesses to preserve tax election advantages. The experienced panelists will discuss drafting techniques for grantor, testamentary, qualified subchapter S trusts (QSSTs) and electing small business trusts (ESBTs), as well as corporate governance and operating requirements.

Description

The formation of small business trusts is a valuable tool in both estate planning and asset protection for owners of closely-held businesses, particularly S-corporations. While there are many tax advantages to using QSSTs and ESBTs, there are different operating rules—and different income tax treatment—for each type of small business trust. Choosing which trust to use requires an assessment of the grantor’s planning needs and the potential tax consequences of election.

Additionally, S-corporations with shares owned by QSSTs must carefully follow governance rules to make sure that the company maintains its S election status. Because an inadvertent loss of S-corporation status can be a catastrophic event that would not only result in double taxation on current income but also void an entire estate plan, counsel must carefully draft both the trust document and the corporation’s articles to ensure both the trust and the S-corp operate within IRS rules.

Listen as our distinguished panel provides techniques for drafting the various types of S corporation trusts, including grantor, testamentary, QSSTs and ESBTs. The panelists will discuss the governance requirements to preserve S election status, as well as evaluate the benefits and drawbacks to each of the major trust forms.

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Outline

  1. S-corporation trusts: Types and characteristics
    1. Grantor trusts
    2. Testamentary trusts
    3. Qualified subchapter S trusts
    4. Electing small business trusts
  2. Operational requirements for both trust and S-corporation
  3. Tax treatment of trusts
  4. Pitfalls to avoid

Benefits

The panel will review these and other key questions:

  • What S-corporation trust drafting techniques should be implemented to maintain advantageous tax attributes?
  • What considerations should be made when evaluating and selecting trusts that are allowed to own S-corporation stock?
  • What are the operating provisions necessary to ensure preservation of both the S election and the trust status?

Faculty

Owen, Langdon
Langdon T. Owen, Jr.
Shareholder
Cohne Kinghorn

Since 1977, Mr. Owen has represented clients in transactions of up to tens of millions of dollars in a wide variety of...  |  Read More

Sydney S. Traum, Esq.
Sydney S. Traum, Esq.
Law Offices of Sydney S. Traum

Mr. Traum's practice focuses on tax law and estate planning. He is regarded as one of the nation's leading...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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