Business Trust

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Business Trust

An unincorporated business organization created by a legal document, a declaration of trust, and used in place of a corporation or partnership for the transaction of various kinds of business with limited liability.

The use of a business trust, also called a Massachusetts trust or a common-law trust, originated years ago to circumvent restrictions imposed upon corporate acquisition and development of real estate while achieving the limited liability aspect of a corporation. A business trust differs from a corporation in that it does not receive a charter from the state giving it legal recognition; it derives its status from the voluntary action of the individuals who form it. Its use has been expanded to include the purchase of Securities and commodities.

A business trust is similar to a traditional trust in that its trustees are given legal title to the trust property to administer it for the advantage of its beneficiaries who hold equitable title to it. A written declaration of trust specifying the terms of the trust, its duration, the powers and duties of the trustees, and the interests of the beneficiaries is essential for the creation of a business trust. The beneficiaries receive certificates of beneficial interest as evidence of their interest in the trust, which is freely transferable.

In some states, a business trust is subject to the laws of trusts while, in others, the laws of corporations or partnerships govern its existence. The laws of each state in which a business trust is involved in transactions must be consulted to ensure that the trust is treated as an entity whose members have limited liability. If the laws of a particular state consider a business trust to be a partnership, the beneficiaries may be fully liable for any judgments rendered against it. The trustees of a business trust are liable to third parties who deal with the trust unless there is a contract provision to the contrary, since they hold legal title to the trust property and may sue and be sued in actions involving the trust. They may, however, seek indemnity from the trust property and possibly from the beneficiaries.

The property of a business trust is managed and controlled by trustees who have a fiduciary duty to the beneficiaries to act in their best interests. In many states, the participation of the beneficiaries in the management of the property destroys their limited liability, and the arrangement will usually be treated as a partnership.

Profits and losses resulting from the use and investment of the trust property are shared proportionally by the beneficiaries according to their interests in the trusts.

A business trust is considered a corporation for purposes of federal Income Tax and similarly under various state income tax laws.

References in periodicals archive ?
In this transaction, Illington purchased the broker-dealer and Proactive Asset Allocation Funds, a Massachusetts business trust and became the investment manager to the Optic- flex DYNAMIC Fund, a mutual fund offered through the trust.
Many practitioners believe that this is an unfair burden and have developed strategies to avoid this entity-level tax, including the use of a Massachusetts Business Trust (MBT).
Informa Group (London) has entered into a conditional agreement to acquire Eaton Massachusetts Business Trust (EMBT; Natick, MA), the publisher of BioTechniques, a monthly bio-research journal, and its European edition.
According to Invesco, each fund's Plan of Redomestication provided for the fund to transfer all of its assets and liabilities to a newly formed Delaware statutory trust whose capital structure is substantially the same as the fund's prior structure, after which fund shareholders now own shares of the Delaware statutory trust and the Massachusetts business trust has been liquidated and terminated.
The ABN AMRO Institutional Prime Money Market Fund commenced operations on December 28, 1999 and is an open-end management investment company established as a Massachusetts business trust.
According to Invesco, each fund's Plan of Redomestication provided for the fund to transfer all of its assets and liabilities to a newly formed Delaware statutory trust whose capital structure is substantially the same as the fund's prior structure, after which, fund shareholders now own shares of the Delaware statutory trust and the Massachusetts business trust has been liquidated and terminated.
org, a Massachusetts Business Trust based in Florida, maintains an inventory of several thousand domains and web sites, valued at upwards of $60 million, which will be offered for public sale in months to come.
a broker-dealer, and Schwab Investments, a Massachusetts business trust that issued the YieldPlus Fund shares, entered into the settlement without admitting or denying the allegations in the order.
The Value Trend Links Fund is a non-diversified series of the Value Trend Funds, a Massachusetts business trust.
Western Investment LLC ("Western Investment"), together with the other Participants (as defined below) named herein, intends to make a preliminary filing with the Securities and Exchange Commission (the "SEC") of a proxy statement and accompanying proxy card to be used at the 2010 annual meeting of shareholders of DWS Strategic Income Trust, a Massachusetts business trust (the "Fund").
The holding company, Berkshire Energy Resources, has been organized as a Massachusetts Business Trust and will initially have as its subsidiaries, Berkshire Gas, Berkshire Propane and Berkshire Energy Marketing.
The holding company, which will be known as Berkshire Energy Resources, has been organized as a Massachusetts Business Trust and will initially have as its subsidiaries, Berkshire Gas, Berkshire Propane and Berkshire Energy Marketing.

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