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This is an irrevocable trust designed to be a qualified holder of S corporation stock. In order to be so qualified, the income beneficiary of the trust must be the sole trust beneficiary, entitled to all of the trust income currently. Article 3 of the Form is designed to satisfy this and all of the other statutory requirements of a Qualified Subchapter S Trust (“QSST”). Transfers of stock held in the trust to a beneficiary that would not qualify as a qualified S corporation shareholder are deemed invalid.
In this Form, the principal of the trust may be paid at any time to the beneficiary for health, education, maintenance and support. The beneficiary is entitled to receive one-half of the trust principal upon attaining age 45, and the balance upon attaining age 60. Of course, other ages could be substituted for these. If the beneficiary should die before reaching age 60, the beneficiary is granted a general power of appointment over the trust property. In default of the exercise of this power by the beneficiary, the trust property passes to the descendants of the beneficiary, and, if there are no descendants, to the siblings of the beneficiary.
Note the presence of a Crummey right of withdrawal in Article 2 of the Form to allow ongoing gifts to the trust to qualify for the present interest gift tax exclusion.
SUGGESTED CLE COURSE: Please note: Mr. Siegel's excellent CLE Course "Planning For The New Medicare Taxes" is currently on our sister CLE/MCLE sites for online study at www.nlfonline.com or on audio cd/dvd at www.nlfcle.com. On both of these web sites, click on your state (or any state if you do not care about earning CLE credits) and scroll down to the course title, "Planning For The New Medicare Taxes", which appears under the heading "Other".
Steven G. Siegel is president of The Siegel Group, a Morristown, New Jersey - based national consulting firm specializing in tax consulting, estate planning and advising family business owners and entrepreneurs. Mr. Siegel holds a BS from Georgetown University, a JD from Harvard Law School and an LLM in Taxation from New York University.
He is the author of several books, including: Planning for An Aging Population; Business Entities: Start to Finish; Taxation of Divorce and Separation; Income Taxation of Estates and Trusts, Preparing the Audit-Proof Federal Estate Tax Return, Putting It Together: Planning Estates for $5 million and Less, Family Business Succession Planning, Business Acquisitions: Representing Buyers and Sellers in the Sale of a Business; Dynasty Trusts; Planning with Intentionally-Defective Grantor Trusts; The Federal Gift Tax: A Comprehensive Analysis; Charitable Remainder Trusts, Grantor Trust Planning: QPRTs, GRATs and SCINs, The Estate Planning Course, The Retirement Planning Course, Retirement Distributions: Estate and Tax Planning Strategies; The Estate Administration Course, Tax Strategies for Closely-Held Businesses, and Tort Litigation Settlements: Tax and Financial Issues.
Mr. Siegel has lectured extensively throughout the United States on tax, business and estate planning topics on behalf of numerous organizations, including National Law Foundation, AICPA, CCH, National Tax Institute, National Society of Accountants, and many others. He has served as an adjunct professor of law at Seton Hall and Rutgers University law schools.
Contact the Siegel Group through its president, Steven G. Siegel, e-mail: email@example.com.
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