Foundation Trust
Understanding the Dynamics of Foundational Trusts
- No judicial jurisdiction
- Requires a holding company
- Income tax deferred
- Protect all assets
- No lawsuits
- No probate
BENEFITS OF A TRUST
- Replaces corporations
- No Secretary of State requirements
- Exempt from BOI (corporate transparency act)
- Can conduct business in all states
- Can endow (pass funds through to Foundation trust)
Legal Structure
Operates under a trust deed or declaration of trust, outlining the rights and responsibilities of trustees and beneficiaries.
Asset Management
Trustees hold and manage assets, such as real estate, stocks, or businesses, on behalf of beneficiaries.
Pass-through Taxation
Income generated by the trust is typically passed through to beneficiaries, who report it on their personal tax returns.
Limited Liability
Beneficiaries usually have limited liability, meaning their personal assets are protected from the trust's liabilities.
Investment Vehicle
Often used as an investment vehicle for real estate portfolios, infrastructure projects, or other large-scale ventures.
Regulation
Governed by specific laws and regulations depending on jurisdiction; may require compliance with securities laws if publicly traded.
Distribution of Income
Trusts distribute income to beneficiaries according to terms outlined in the trust deed or declaration.
Duration and Termination
Trusts can have a limited or indefinite duration; termination may occur upon fulfillment of stated objectives or by decision of trustees.