Georgia Irrevocable Trusts are legally binding agreements established by individuals (known as granters or settlers) in the state of Georgia. These trusts are considered Qualifying Subchapter-S Trusts (Costs), meaning they meet certain requirements outlined by the Internal Revenue Service (IRS) for Subchapter S corporations. A Georgia Irrevocable Trust is a trust that cannot be altered, modified, or terminated without the permission of the beneficiaries stated in the trust agreement. This type of trust provides a range of benefits, including asset protection, estate tax reduction, and the ability to control the distribution of assets after the granter's passing. There are several types of Georgia Irrevocable Trusts that fall under the category of Qualifying Subchapter-S Trusts: 1. Georgia Irrevocable Life Insurance Trust (IIT): This trust is primarily used for estate planning purposes and aims to remove life insurance policy proceeds from the granter's taxable estate. By establishing an IIT, the granter can ensure that the insurance payout is not subject to estate taxes, thereby maximizing the amount passed on to beneficiaries. 2. Georgia Charitable Remainder Trust (CRT): A CRT allows the granter to make a charitable donation while also providing income for themselves or their beneficiaries. By contributing assets to this trust, the granter receives a tax deduction and regular income payments for a predetermined period. Once the trust term ends, the remaining assets are donated to the chosen charitable organization. 3. Georgia Special Needs Trust (SET): An SET is specifically designed to benefit individuals with special needs or disabilities. By establishing this trust, the granter can provide financial support without jeopardizing the beneficiary's eligibility for government assistance programs. The SET ensures that the beneficiary's quality of life is improved while still maintaining their eligibility for public benefits. 4. Georgia Qualified Personnel Residence Trust (PRT): A PRT enables the granter to transfer ownership of their primary residence or vacation home while continuing to reside in it for a specific period. This trust reduces the granter's taxable estate while allowing them to retain the right to live in the property. After the predetermined term ends, the residence is transferred to the beneficiaries or a designated trust. In conclusion, Georgia Irrevocable Trusts are an effective estate planning tool that offers various tax benefits, asset protection, and control over asset distribution for granters. Depending on the specific needs and goals of the granter, different types of trusts, such as Slits, CRTs, Sets, and Parts, can be utilized to achieve desired outcomes.
Georgia Irrevocable Trust which is a Qualifying Subchapter-S Trust
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A trust may be "qualified" or "non-qualified," according to the IRS. A qualified plan carries certain tax benefits. To be qualified, a trust must be valid under state law and must have identifiable beneficiaries. In addition, the IRA trustee, custodian, or plan administrator must receive a copy of the trust instrument.
Background. A QSST is one of several types of trusts that are eligible to hold stock in an S corporation. Its two primary requirements are (1) there can be only one beneficiary of the trust and (2) all income must be distributed at least annually (Sec. 1361(d)(3)(B)).
Net investment income tax of a QSST 1411(a)(2)). The tax also applies to QSSTs to the extent the net investment income is retained in the trust. Although the S corporation income of a QSST is taxed to the individual income beneficiary, capital gain on the sale of the S corporation stock is taxed at the trust level.
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).
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.
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.
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.
Non-natural persons, or entities, include trusts, charities and corporations. A trust with individual beneficiaries will usually qualify for the exception mentioned above.
Irrevocable trusts are often set up as grantor trusts, which simply means that they are not recognized for income tax purposes (all of the income tax attributes of the trust, such as income, loss, gains, etc. is passed on to the grantor of the trust).
A qualified revocable trust (QRT) is any trust (or part of a trust) that was treated as owned by a decedent (on that decedent's date of death) by reason of a power to revoke that was exercisable by the decedent (without regard to whether the power was held by the decedent's spouse).