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ScottyMacEsq
ScottyMacEsq, Attorney
Category: Estate Law
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Experience:  Licensed Texas General Practice Attorney
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I need to set up a Legal Defense Fund for someone else. What

Resolved Question:

I need to set up a Legal Defense Fund for someone else. What kind of trust should I set up? When trying to get an EIN, it asks for a kind of trust. I don't know how to answer that. http://www.irs-ein-application.com/ Also, can legalzoom or rocketlawyer or some online company set up this trust for me? Thanks.
Submitted: 3 years ago.
Category: Estate Law
Expert:  ScottyMacEsq replied 3 years ago.

ScottyMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

ScottyMacEsq :

First of all, do NOT go through the site that you listed. It is not affiliated with the IRS, and they're not going to do it for free (this is something you can do on your own at no cost). Go to this site to do it: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html. It's going to need to be an irrevocable charitable trust. On this link that I sent you, when you start the application, you'll want to select "other" as the type, and then on the next page again select "Other non-profit..."

ScottyMacEsq :

You'll be able to get your EIN number there.

ScottyMacEsq :

Now as to the terms of the trust...

ScottyMacEsq :

I would look on Rocketlawyer or www.uslegalforms.com to find the appropriate documentation.

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please select the "accept" button. If you have already clicked "accept", or if you will in the future, please let me know so I can track these for my own reports and customer satisfaction stats. Thank you, XXXXX XXXXX good luck to you!

Customer:

Thanks. This is helpful. I really apprecite your advice and correcting the link was a huge bonus tip for me! You are very kind.

ScottyMacEsq, Attorney
Category: Estate Law
Satisfied Customers: 11361
Experience: Licensed Texas General Practice Attorney
ScottyMacEsq and 6 other Estate Law Specialists are ready to help you
Customer: replied 3 years ago.
Does this irrevocable trust have any tax breaks? Is there a better way to set up a legal defense fund where there is no harsh taxes on the amount raised? I heard that some type of charitable trust or foundation might be helpful for this. Please explain the differences and let me know what if any tax break there is with this irrevocable trust. Thanks!!
Customer: replied 3 years ago.
Also, this legal defense fund would be for more than one person and would serve anyone with needs for LEGAL AID. So, given that it is for serving others, too, would it still be an irrevocable trust or a charitable trust of some type? Thanks!
Expert:  ScottyMacEsq replied 3 years ago.
If you set it up in your state as a non-profit, then you won't have taxes imposed on the amounts that you raise. Now if you're going to be serving anyone in need, that's more along the lines of a non-profit corporation, where you would want to try to get 501(c)(3) status (donors can deduct donations from their taxes). If it is a defense fund for an individual person, that's a trust. But if you're setting it up to be an on-going fund for anyone with needs, that should be a corporation.
Customer: replied 3 years ago.

Can you give the bulk of monies raised to one person who needs it initially? Is there a contribution limit to one individual needing legal aid funds? Can we just serve the one person the first year? Thanks for your time.

Expert:  ScottyMacEsq replied 3 years ago.
Yes, you can do that, and there's no limitation on the amount, but you should clearly spell out this purpose in the organizing documents (articles of incorporation / bylaws / etc...) so there is no confusion.
ScottyMacEsq, Attorney
Category: Estate Law
Satisfied Customers: 11361
Experience: Licensed Texas General Practice Attorney
ScottyMacEsq and 6 other Estate Law Specialists are ready to help you

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