A statutory trust is a legal entity that provides the benefits of limited liability to its shareholders. While not technically an LLC, it can be set up as one if desired. This statutory trust offers many advantages to investors who are looking for more than just ownership in their company without all of the responsibility or hassle that comes with setting up and maintaining an LLC.
Comprehensive, Anonymous Asset Protection
These Statutory trusts are often the preferred choice for business owners who want to protect their personal assets from creditors or lawsuits without adding all of the expense and hassle that comes with establishing an actual corporation.
The best part about this entity is its popularity among online businesses, thanks to its low-cost simplicity and ease of use outside of a legal context. It doesn’t have much history as far as being used within other industries, but it’s not difficult to see how one might benefit by having access to these great advantages at such little cost.
No Personal Liability For Investors Or Directors
This means that, unlike standard corporations where stockholders can be held personally responsible for the actions of their business, investors in a Delaware Statutory Trust aren’t liable. This means that you can invest without the fear of being sued by creditors or shareholders if something goes wrong, and your assets are protected from legal action.
Drafting Your Operating Agreement Is a Breeze
Drafting is easy because it operates as an LLC, setting up a statutory trust is very easy and requires little more than hiring an attorney to draft the required documents: operating agreement (unlike with regular corporations) and/or certificate of incorporation (if desired). The IRS doesn’t even require this entity to file tax returns; taxation is instead handled at each shareholder level.
This structure works well if you want to protect yourself while allowing limitations on liability when necessary, such as borrowing or lending money or being a partner in an investment opportunity.
Creative, Completely Legal Tax Savings
One of the most popular reasons that people choose to incorporate is because they want their personal income and financial gains protected from taxation. While it’s true that this kind of structure can help you avoid paying taxes, there are also some tax benefits for choosing the Statutory Trust instead. (https://www.morrisjames.com/newsroom-articles-statutorytrusts.html)
Any losses or deductions which lower your taxable income will be passed through directly to each shareholder member; any amount not used by you personally will then flow down into the trust itself, where it cannot be taxed again.
This means that if you’re anxious about using up all of your deductions during the year (and losing them forever), investing in something like an LLC might actually work out better for your bottom line.
Earnings And Profits Are Taxed Only Once
All of the money that a Delaware Statutory Trust makes will be subject to taxation only once at the corporate level rather than being taxed individually within each shareholder’s personal returns, making it much more cost-effective for investors and business owners; alike.
This applies not only to salaries but also any dividends or profits paid out as well, making this entity an attractive choice when you’re trying to save where you can without giving up too many benefits in return.
No State Franchise Taxes to Pay Unless You Want To Incorporate
Like with regular corporations, certain states (such as California) require companies who operate within their borders to pay franchise taxes whether they’ve incorporated or not.
While individual shareholders might pay some taxes as well, this is usually a small price to pay for the benefits of Delaware Statutory Trusts and isn’t expected. This type of entity has become popular enough that even those within other industries are beginning to discover its advantages; sports teams who can benefit by having limited liability when it comes time to purchase equipment or facilities without paying franchise fees in certain states have begun adopting; this structure.
A Delaware Statutory Trust is one of the easiest to create, lowest maintenance entities because people can invest their money without worrying about incurring personal liability. It’s not required that you incorporate unless other circumstances at play make it necessary, but when this structure isn’t already taken by someone else, it can be a great choice! Best of all? You don’t have to worry much about state taxes except for your federal return if you’re an LLC.