Can A Trust Be The Grantor of Another Trust
Yes, a sui juris (independent) trust can be the grantor for another trust; however, there are often complications that arise from such a structure. Many often use this type of trust to create a trust web, which could inadvertently create multiple holes in the structure's inherent protections.
For example, TRUST A creates TRUST B, TRUST C and TRUST D which all have interlinking UCC-1/PSA contracts. TRUST A, being the grantor, must disclose all of its trustees, proving unanimous approval of TRUST B, C and D's creation. Should these entities be brought in court, the trustees from TRUST A will be shown to be similar, if not exact matches, of all other trusts. This fails the "Smell Test", it could also open up "Fraudulent Conveyances" issues regarding transfers of assets between these trusts, including "in-persona conjuncta aequiparatur interesse proprio" meaning "a person united equal one's own interest." This equates to the trusts be void ab initio (void from the beginning). In short, if a trust created by another trust is to be used in a trust web - avoid it!
NOTE: The primary use of a trust creating another trust, is to direct a new board of trustees to sub-manage specific trust assets without the original trust's oversight or control. This is primarily useful when a large trust res holds multiple organizations or stocks and the trust wishes to diversify such portfolios with a new board of experts.
Can Anyone Trust The Grantor / Friend / Neighbor - What If They Try To Steal The Trust's Assets
If a grantor/friend/neighbor tries to make a grab for a trust's assets - do not worry. A trust means the grantor must lose ownership AND control. Finally, what will a grantor care about signing a piece of paper granting a grain of sand to The Board ...
When Is an Irrevocable Trust a Grantor Trust
An irrevocable trust can become a grantor trust if the trust meets certain IRS requirements. If any of these requirements are met, the trust will no longer be considered a separate tax entity and the grantor is taxed on trust income. 1. The Grantor ...
How May The Grantor Create a Trust Without Owning Any Assets
The trust is a private contract, and the consideration needed to create a legal contract falls under The Peppercorn Rule. This rule is a metaphor for a very small cash payment or other nominal consideration, used to satisfy the requirements for the ...
Can The Bulletproof Trust Pay for Grantor's Expenses
No, the Bulletproof Trust is not drafted to be this type of trust; however, one can customize the trust indenture to specificy these requirements. When a grantor is paid from the trust it created, this is considered a Grantor Retained Annuity Trust ...
Will Grantor's Death Affect A Corporation Owned By The Trust
Living trusts and testamentary trusts may only hold S-Corporation stock for 2 years after the date of death of the grantor. After death, the trusts become ineligible shareholders and the corporation will lose its S-election due to the grantor's ...