Common-Law Trust

More commonly known as a Business Trust or a Massachusetts trust. A business organization for investment purposes by which trustees manage and control property for the benefit of beneficiaries who are protected against personal liability for any losses incurred.

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Indeed, most are formed for a business purpose and some statutes expressly preclude a traditional common-law trust purpose.

A simple check-the-box extension to trusts would further advance both the spirit and scope of the check-the-box Regulations and would presume every common-law trust will be classified as an ordinary trust subject to taxation under Subchapter J.

Extensive early litigation focused on the federal tax classification of common-law trusts, such as the Massachusetts business trust, (9) as ordinary or business trusts.

The exclusion perpetuates the uncertain classification of common-law trusts as an ordinary or business trust in the first instance.

Because most common-law trusts are formed on the assumption that the trust will be classified as a trust and not as some other business entity inconsistent with the trust form, the ordinary trust classification assumption comports with the most normative default rule.

This would then permit common-law trusts to make a second election to be taxed like a corporation--the same elective right accorded other unincorporated business entities.

Forgotten trust: a check-the-box Achilles' heel

A fourth variation involved an otherwise standard form of common-law trust that was settled under the laws of a foreign tax-haven jurisdiction, with the funds deposited in a local bank in that tax haven.

Deferred compensation for executives under sec. 409A

Other legal structures are superior vehicles for succession planning, such as legal structures involving common-law trusts.

Common-law trusts can be administered according to the wishes of the founders.

However, common-law trusts are often unviable for GCC family owned businesses.

"Winter is Coming" How Family Businesses can survive Generational Transitions

The notes will be issued in series by special purpose Delaware statutory or common-law trusts and each series of notes will be secured by one or more funding agreements issued by Protective Life.