Your decision to form a statutory trust might be a consideration you are making. Whether you know the benefits of statutory trusts or not, you should know that you can indeed benefit from one. Here is an informative overview of the five main reasons you might want to establish a statutory trust for your business.
1. Easy and Affordable Formation
In most instances, you will need to file the needed paperwork with the state’s Secretary of State office. However, before you can head to file the official paperwork, you must have an already established private trust agreement. Your agreement must ensure that everyone and every entity that is part of the trust has everything in place. And remember, part of that structure is establishing safety-nets and legal protections.
Did you know that your private trust is not presented to the Secretary of State’s office? You only have to provide the name of your trust, and the name and address of your trustee. The only people that have to know of your involvement are those who are members of the trust, or anyone that approves membership in the trust, i.e. any board members to which your report. You and anyone involved might appreciate more anonymity.
2. Anonymity Protection
The protection of your anonymity is another reason why you, and maybe your business partners, want to establish a statutory trust. Since you do not have to provide your name or your partners’ names because a trustee will suffice, you can address your anonymity concerns.
You could have several reasons you might want to hide owner information and other personal information, too. No matter your reasons, you might benefit from setting up a statutory trust for your financial enterprises. You will ensure anonymity.
3. Bankruptcy Features
Statutory trusts come with many bankruptcy features that would be very helpful should your company encounter those issues. Trusts are special purpose entities that will have more options to prevent bankruptcy from needing to be filed and impacting you.
And if you did have to file bankruptcy, you will have much better bankruptcy options than those that come with a common trust. Therefore, you might want to have a statutory trust should your trust ever deal with extreme financial hardships.
4. Effective Tax Strategies
One benefit you will see right off the bat is savings on your taxes. For Example, in Delaware, the $800 tax fee common for an out of state statutory trust establishment is not billed. Not having to pay that $800 is a pretty good reason for wanting to set up a Delaware statutory trust. Likewise in another State, you might receive other benefits when you set up your trust.
You also will have other strategies where your trustee and accountant can assist you. They will be able to make sure everyone involved gets the largest refund possible. And if you do own tax money, you can decrease your likelihood of receiving a tax bill too big for your entity to handle.
5. Protections from Lawsuits
The protections from lawsuits is one of the more popular reasons business owners like you choose to set up these types of trusts. if you do not have a statutory trust in place, you run the risk of not only the trust being sued, but you can be sued, too. Not only could you lose assets relating to your company, but your personal assets could be jeopardized, too.
And why would you want to take such a risk? If you can stay on top of your assets without your assets being tied to you, this might be a pressing need you are overlooking. You should be certain not to take this risk any further. You should consider a statutory trust now to ensure you, your business, and your money is protected from even the most aggressive attempts at legal action against you.
Your Most Important Asset Ever?
As a business owner, you must take any steps you can to protect all your years of hard work and your assets. And when you really start to think about it, the five highlighted reasons above probably point to why a statutory trust might be your most important asset ever.
Samantha Higgins is a professional writer with a passion for research, observation, and innovation. She is nurturing a growing family of twin boys in Portland, Oregon with her husband. She loves kayaking and reading creative non-fiction.