Draw a conclusion about the purpose of the company's trust based on the research of your company
I chose Target as the company of my choice. Target is one of the largest trust companies in the United States. After the research I conducted on the company it was clear to me what the value of share holders’ assets the organization holds. At target, the share holders are familiar with the purpose of trust in providing the needed flexibility when planning to transfer assets to their heirs and loved ones. The shareholders give the company essential powers to benefit the beneficiaries of the trust. Target Company bestows the grantors with freedom to choose between revocable and irrevocable trust. Revocable trust provides the grantor with the opportunity to maintain control of his/her assets until he is mentally incapacitated. The terms of the trust can also be changed at grantors will. Irrevocable trust allows the grantor to move the assets to the trust company giving the trustee power to make all decisions concerning investment of the assets (Hilary, 2014). It is also essential in helping the grantor avoid all capital gains taxes associated with the assets. Target company generally helps the grantors avoid tax burdens and protect the latter’s assets from going to probate.
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Why would a small business owner want to set up a trust, and how could it be used for estate planning purposes?
Small business owners would like to set up trust because of several reasons. Some of the reasons for building trust include; building a strong relationship with the market or the clients. Small companies have to find their way to the top. For them to make it, they have to build a strong trust with the market for them to compete with other competitors in the business. Therefore the purpose of the trust is to get customer loyalty. According to the research conducted by Fortune indicated that top tanked their employees trusted organizations(Hilary, 2014). Therefore the small organizations will need to be trusted by their employees.
For the estate planning process, trust can be used for given reasons and to their advantage. Trust in estate planning can be described as a structure that allows the trustee to conduct business on behalf of the trusted members (LaPonsie, 2015) . For estate planning, the trust can be offered in two different ways that are as a unit trust or a discretionary trust. For the unit trust, the interest is divided according to the distribution determined by members equally for a discretionary trust. The fund distribution for the beneficiary has discretion. The advantage of trust in estate planning is that it reduces the liability for the corporates. Another advantage is that trust ensures the assets owned by the estate are well protected (Estate planning, 2019) . Finally, there will be flexibility between the income distribution as well as the distribution of the assets.
Evaluate the similarities and differences between trusts and corporations. In an attempt to protect income, which would be most suitable for a company?
Trust is one of the organizations whose trustee can operate the fiduciary duty and also be the administrators of their financial assets or another different business. The people who put their assets in the hands of the trust organization believe that the firm will manage their funds well on their behalf(Hira Waqar, 2018). A corporation, on the other hand, is mostly owned and sometimes operated by shareholders ranging from employees to board of directors who run the corporations. They all come together to increase the profitability of the company. Publically traded corporations allow investors to buy shares of the company in the hope to realize a good return on investment. They both provide ownership interest to be transferred to beneficiaries, trust on an annual basis if the trust is s living trust, and the terms of the trust have been upheld, corporation in the form of gift to a family member. It is also important to point out that trust is included in the estate for tax purposes if it is not an irrevocable trust, and assets in the corporation are treated separately for tax purposes (Hilary, 2014). With that being said, the corporation is probably the best bet for companies when it comes to protecting income.
References
Estate planning, (2019) Understanding Estate Taxes. (n.d.). Retrieved on July 12, 2019, from https://www.estateplanning.com/Understanding-Estate-Taxes/
Hilary, S. (2014). To regain trust, Target must do more, crisis expert says. The New York Times. Retrieved on July 14, 2019, from https://www.nytimes.com/2014/01/11/business/to-regain-trust-target-must-do-more-crisis-experts-say.html
Hira Waqar. (2018) "Difference Between Trust and Company." DifferenceBetween.net. Retrieved on July 12, 2019, from http://www.differencebetween.net/business/difference-between-trust-and-company/
LaPonsie, M. (2015, November 19). 5 Estate Planning Strategies to Keep Your Money in the Family. Retrieved on July 12, 2019, from http://money.usnews.com/money/retirement/articles/2015/11/19/5-estate-planning-strategies-to-keep-your-money-in-the-family
