This episode examines the intricacies of using trusts to own S corporation stock, focusing on the permissible trust structures under the Internal Revenue Code. It explains the distinctions between Grantor Trusts, Qualified Subchapter S Trusts (QSSTs), and Electing Small Business Trusts (ESBTs), highlighting their respective tax implications and suitability for various estate planning goals. Practical drafting tips for attorneys and other professionals involved in structuring such arrangements emphasize the importance of precise language and timely elections to maintain S corporation status. Finally, it underscores the need for professional guidance in navigating the complex rules governing trust ownership of S corporations.
