Business Law

Ask a business lLawyer. Get business law questions answered ASAP.

Ask a Lawyer,
Get an Answer ASAP!

This answer was rated:

I own 50% of an Illinois S Corp and 50% of an Illinois LLC.

I own 50% of...

I own 50% of an Illinois S Corp and 50% of an Illinois LLC. I want to put the ownership of both into a trust that I established in Belize. Originally I did not intend to put the shares into the trust but have changed circumstances. Is this possible?

Lawyer's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

The Belize trust is an irrevocable grantor trust, established in 2013. I am the primary beneficiary. The trust is the sole member of a Belize LLC also.

Show More
Show Less
Ask Your Own Business Law Question
Answered in 2 hours by:
3/14/2018
Legal Eagle
Legal Eagle, Lawyer
Category: Business Law
Satisfied Customers: 10,390
Experience: Licensed to practice before state and federal court
Verified

Hello! I am a licensed attorney, admitted to practice in state and federal court. I have a nearly 100% satisfaction rating (click here for more info) so all that means is that you can count on me to help today. Because I want to provide you with the most accurate answer possible, do you mind if I take a moment to review your question?

Please keep in mind that our conversation does not include an attorney-client relationship and this is for general information purposes only.

Ask Your Own Business Law Question

Thanks so much for your patience on this. The answer to your question is yes, you can put ownership of both companies into a trust, even if it is established overseas. A trust in the United States will be valid so long as it was made according to the rules and laws of the place where it was made. The law in the U.S. doesn't specifically have to recognize the formation of foreign trusts; however, if the formation of that trust was in accordance with local laws or if you make a trust just consistent with IL law (witnesses, trust property, signatures, etc.) then you will be fine.

What other questions did you have for me today that I can help you out with:-)?

Ask Your Own Business Law Question
Customer reply replied 1 month ago
Thanks for your response, the question however was not about the validity of a foreign trust, rather I have read that a foreign trust cannot be a shareholder of a Subchapter S Corporation. If you can locate the irs language that gives me a definitive answer on that I can make a plan.

I'm very sorry. I think I may have misunderstood the question. Thank you for clarifying. So, you can make a trust that is valid; however, 26 U.S. Code § 1361 2(A)(vi) prohibits a foreign trust from owning shares in an S-corporation. This means that your best bet would be to simply make the trust consistent with U.S. law and you can own part of the U.S. corporation and not be in violation of the tax code. My apologize for any misunderstanding.

Did you have any other questions for me today that I can help you with?

Ask Your Own Business Law Question
Customer reply replied 1 month ago
Ok, so what I have read was correct. The object of owning a foreign trust for me is to remove the ability of a US court to order actions on the part of the trust, protection from law suits or divorces (none of which are on the radar) but as a business owner for many years I consider myself lucky that I have not been the victim of a frivolous law suit.
Is it possible to either:
a. Transfer the S-Corp to the LLC, which can then be put into my foreign trust or;
b. Establish a domestic trust to hold the S-Corp but wrap that trust in my foreign trust.
Thanks again for your help.
Pat

Yes, what you read was accurate. So, to answer your question:

1. No, even if the LLC is the owner the corp, if the owner of the LLC is a foreign trust, then the code I mentioned above will still apply. The LLC would be disregarded.

2. No, the same principles would apply.

In your case, although I can understand not wanting to be subject to US courts, so long as you want ownership in the S-Corp, the law says you can't have a foreign trust be an owner at all. I think that having the LLC own the part of the S-corp is a wise idea in part because it provides that corporate shield that you need in case the S-corp is sued. Even if the corporate veil is pierced, it is your LLC's assets that would be at risk and not yours personally. So, basically, you'd have two corporate layers of protection and you would be abiding by the US tax code at the same time.

What other questions did you have for me today about this?

Ask Your Own Business Law Question
Customer reply replied 1 month ago
Ha, no magic bullet, oh well I figured as much.
The end game for this will be that my son will be buying the companies from me over time, beginning next year, and I want the proceeds to go to my foreign trust but however meanwhile, I plan to marry and really want to have the companies out of harms way in the event that it doesn't work out. Having been married twice over the course of 30+ years I know that nothing lasts forever.
It has really just occurred to me that I can accomplish this with a domestic trust, A. whose beneficiary is the foreign trust, B. with language to disperse the funds from A to B according to a formula that I prescribe. Does that make sense to you?

Yes, that make sense and appears to be legally compliant as well. The foreign trust can receive the proceeds of the s-corp, but they can't be the owner of the s-corp, so that may be a better way to handle it and protect your assets.

Did you have any other questions for me today?

Legal Eagle
Legal Eagle, Lawyer
Category: Business Law
Satisfied Customers: 10,390
Experience: Licensed to practice before state and federal court
Verified
Legal Eagle and 87 other Business Law Specialists are ready to help you
Ask your own question now
Customer reply replied 1 month ago
No, thank you for your help.

You bet.

Ask Your Own Business Law Question
Was this answer helpful?
Ask Legal Eagle Your Own Question
Legal Eagle
Legal Eagle
Legal Eagle, Lawyer
Category: Business Law
Satisfied Customers: 10,390
10,390 Satisfied Customers
Experience: Licensed to practice before state and federal court

Legal Eagle is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

< Previous | Next >

Meet the Experts:

Infolawyer

Infolawyer

Attorney

1,851 satisfied customers

Experienced lawyer

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

1,611 satisfied customers

Run my own successful business/contract law practice.

MShore Law

MShore Law

Attorney

1,233 satisfied customers

Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

RGMacEsq

RGMacEsq

Attorney

751 satisfied customers

Licensed Texas General Practice Attorney

Barrister

Barrister

Attorney

646 satisfied customers

17 years practicing attorney, JD, BA, MBA

Ely

Ely

Attorney

577 satisfied customers

Counselor at Law.

J.Hazelbaker

J.Hazelbaker

Attorney

393 satisfied customers

Experienced and trained in the area of business law.

< Previous | Next >

Related Business Law Questions
I merged my sub s corporation with a group of other
I merged my sub s corporation with a group of other companies back in 2011; since that time they bought me out and I retained ownership of approximately 9% of the new company. On the closing documents… read more
PaulmoJD
PaulmoJD
Attorney At Law
Doctoral Degree
106 satisfied customers
I am the secretary for a family S Corporation. Each year
I am the secretary for a family S Corporation. Each year prior to the shareholder meeting, I send paper proxies out for signature....it is difficult getting them back. If I email them, can the person … read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,851 satisfied customers
We have a small business a LLC corporation in Los Angeles
We have a small business a LLC corporation in Los Angeles California. When we hire an employee should we have them fill out an application or sign a part time employment agreement. What is the differe… read more
RGMacEsq
RGMacEsq
Attorney
Doctoral Degree
751 satisfied customers
What are the steps to change ownership in a s corporation in
What are the steps to change ownership in a s corporation in California? Initially it was 2 shareholders, I have to remove one of them.… read more
socrateaser
socrateaser
1,031 satisfied customers
Does an LLC business pay the new business tax rates? If not
Does an LLC business pay the new business tax rates? If not what business types could I form to pay the new rates and not my personal tax rate? How is the 20% deduction calculated?… read more
Attorney Wendy
Attorney Wendy
Member
Juris Doctorate
531 satisfied customers
I ran an S Corporation (consulting) for 3 years that was
I ran an S Corporation (consulting) for 3 years that was incorporated in California. I live and work in California. I stopped doing business as the S Corp in 2014 and started doing part time work unre… read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,750 satisfied customers
I have a question about corporate law. I am 50% shareholder
Second opinion] I have a question about corporate law. I am 50% shareholder in an s corporation. My business partner spends half of the year abroad. He is currently out of the country. Our business is… read more
Michael Bradley
Michael Bradley
JD
1,371 satisfied customers
I have a question about corporate law. I am 50% shareholder
I have a question about corporate law. I am 50% shareholder in an s corporation. My budiness partner spends half of the year abroad. He is currently out of the country. Our business is no longer solve… read more
Damien Bosco
Damien Bosco
4,188 satisfied customers
My business is registered in Delaware as an LLC with a
Hi Pearl, my business is registered in Delaware as an LLC with a partner. My partner is no longer with the company. I would like to move the business to PA where I live. I am also changing the name of… read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
1,170 satisfied customers
Is there a rule which requires that a corporation (or LLC)
Is there a rule which requires that a corporation (or LLC) must have a lawyer in a civil case?… read more
Damien Bosco
Damien Bosco
4,188 satisfied customers
We have an s corporation. In the shareholder agreement there
We have an s corporation. In the shareholder agreement there is a provision that the corporation must repurchase shares from minority shareholder when offered. Shareholder Agreement further states tha… read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
1,170 satisfied customers
Looking a the corporate practice of medicine in Illinois
Looking a the corporate practice of medicine in Illinois what are the ownership requirements, can a chiropractor own a medical practice … read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,851 satisfied customers
Converting my llc business to a c corporation and looking
Converting my llc business to a c corporation and looking for a lawyer to sign the paperwork … read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,750 satisfied customers
Do all shareholders, ( 3 shareholder corporation) have the
Do all shareholders, ( 3 shareholder corporation) have the right to inspect the bank accounts? (florida corporation) … read more
Dwayne B.
Dwayne B.
Juris Doctor
28,766 satisfied customers
My S corporation is a member of an LLC which has other
My S corporation is a member of an LLC which has other members in it as well. Can my S corporation be the listed manager of the LLC in Illinois? All the members agree to having the S Corporation as th… read more
RGMacEsq
RGMacEsq
Attorney
Doctoral Degree
751 satisfied customers
My family and i have a corporation it is a s corporation we
my family and i have a corporation it is a s corporation we had a family issue in which there was a 50 50 split one member from the other side sold her shares to the other side breaking the time so th… read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,851 satisfied customers
In Colorado if an s corporation has no bylaws and there is a
In Colorado if an s corporation has no bylaws and there is a situation of possible left using a debit card by an employee and 20% shareholder does the State of Colorado use default bylaw and where can… read more
socrateaser
socrateaser
1,031 satisfied customers
Llc or s-corporation? I am a sole proprietor, mainly selling
Llc or s-corporation?I am a sole proprietor, mainly selling used merchandise online less than $100 K annually.I am considering to increase sales, and change business entity to llc or s corporation in … read more
TaxAttorneytoHelp
TaxAttorneytoHelp
Owner
Doctoral Degree
2,542 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x