Illinois Qualified Subchapter-S Trust for Benefit of Child with Crummey Trust Agreement
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How to fill out Qualified Subchapter-S Trust For Benefit Of Child With Crummey Trust Agreement?
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Yes, Illinois recognizes S Corporations, which can have significant implications for trusts that benefit from S corporation income. An Illinois Qualified Subchapter-S Trust for Benefit of Child with Crummey Trust Agreement can allow the trust to elect S Corporation taxation rules, offering potential tax benefits. Understanding how these corporate structures operate within Illinois law is essential for effective estate planning. If you're exploring this option, uslegalforms can guide you through the necessary steps.
Crummey Trust, Definition This type of trust is typically used by parents who want to make financial gifts to minor or adult children, though anyone can establish one on behalf of a beneficiary.
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.
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.
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.
Crummey trusts are typically used by parents to provide their children with lifetime gifts while sheltering their money from gift taxes as long as the gift's value is equal to or less than the permitted annual exclusion amount.
However, where income is derived by a discretionary trust, the income can be distributed to various family members and split between them. Where there are children in the family, this would provide an opportunity for significant tax savings by distributing income of the trust to the children.
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.
Thus, if a grantor wants to leave S corp stock to a trust for her family members after her death without terminating the company's election, the trust must qualify either as an electing small business trust (ESBT) or as a qualified subchapter s trust (QSST).
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.