Qualifying Subchapter-S Revocable Trust Agreement
Understanding this form
The Qualifying Subchapter S Revocable Trust Agreement is a legal document that establishes a trust designed to allow beneficiaries to receive income while providing potential tax benefits. This form differs from standard trusts as it recognizes the uniqueness of shareholders in a Subchapter S corporation, often providing significant estate and income tax savings. A Qualified Subchapter S Trust (QSST) typically allows a beneficiary to be different from the grantor, enhancing estate planning flexibility.
Main sections of this form
- Identification of parties: Names and addresses of the Trustor and Trustee.
- Additions to Trust: Guidelines on transferring additional assets into the trust.
- Rights of Trustor: Provisions detailing the Trustor's rights to amend or revoke the agreement.
- Distribution: Instructions for income distribution to beneficiaries.
- Powers and Duties of Trustees: A comprehensive list of the authority granted to the Trustee over the trust assets.
When to use this form
This form is needed when an individual (the Trustor) wishes to create a revocable trust that qualifies as a QSST, typically for estate planning involving beneficiaries who are not the Trustor. It is ideal for those looking to optimize tax implications related to their Subchapter S corporate shares while ensuring the future financial security of specified beneficiaries.
Intended users of this form
- Individuals who own shares in a Subchapter S corporation.
- Those looking to provide tax-efficient planning for their estate.
- Trustors who want to segregate income benefits to specific beneficiaries.
- Estate planners and financial advisors assisting clients with structured asset distributions.
Instructions for completing this form
- Identify the parties: Fill in the names and addresses of the Trustor and Trustee.
- Specify the property: List the assets included in the trust in the attached Schedule A.
- Designate the beneficiaries: Clearly state the current income beneficiary of the trust.
- Outline distribution instructions: Provide guidelines on how income will be distributed to beneficiaries.
- Enter dates and signatures: Complete the agreement by dating and signing where indicated.
Does this document require notarization?
Notarization is generally not required for this form. However, certain states or situations might demand it. You can complete notarization online through US Legal Forms, powered by Notarize, using a verified video call available anytime.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Avoid these common issues
- Failing to properly identify all parties involved, which can lead to legal ambiguities.
- Not including all intended assets in Schedule A, which can affect trust validity.
- Overlooking state-specific requirements, which could render the trust unenforceable.
- Neglecting to have the form signed in the correct format, potentially impacting its legal standing.
Benefits of using this form online
- Convenience: Download and complete the form at your own pace.
- Editability: Easily update the trust document as personal circumstances change.
- Reliability: Access templates drafted by licensed attorneys, ensuring legal compliance.
Quick recap
- The Qualifying Subchapter S Revocable Trust Agreement is designed for those with Subchapter S corporation shares seeking tax benefits.
- It allows asset control and distribution to beneficiaries who are not the Trustor.
- Ensure to identify all key parties and list assets accurately in the form.
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FAQ
Only estates, individuals, and certain trusts can own shares in an S corp. Corporations, partnerships, and non-resident aliens cannot own stock.If the trust is a grantor trust, testamentary trust, qualified Subchapter S trust (QSST), revocable trust, or retirement account trust, the trust counts as one shareholder.
Houses and other real estate (even if they're mortgaged) stock, bond, and other security accounts held by brokerages (but think about naming a TOD beneficiary instead) small business interests (stock in a closely held corporation, partnership interests, or limited liability company shares)
Generally, estates and six types of trusts are eligible as S corporation shareholders, these include grantor trusts, electing small business trusts (ESBTs), qualified subchapter S trusts (QSSTs), and testamentary trusts (for two years after funding.
1361(d)(3), for a trust to qualify as a QSST, its terms must require that during the life of the current income beneficiary, the trust will have only one income beneficiary; and all of the trust's accounting income must either be required by the terms of the trust instrument to be distributed, or actually be
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.
While there can only be one income beneficiary, a QSST may designate successor beneficiaries. With an ESBT, you can set up one trust that includes all of the income beneficiaries. However, note that any ESBT designated beneficiaries must be an individual, estate or charity eligible to own S corporation stock.
In order to become an S corporation, the corporation must submit a completed Form 2553 (Election by a Small Business Corporation) that has been signed by all the shareholders. The following information must be provided: The corporation's name and address. The tax year when the election will take effect.
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.
Only estates, individuals, and certain trusts can own shares in an S corp.If the trust is a grantor trust, testamentary trust, qualified Subchapter S trust (QSST), revocable trust, or retirement account trust, the trust counts as one shareholder.
