so all right business trust organizations i don't know where this started i don't know the genesis
of this ball all we know is that we get a heck of a lot of people that come to us thinking they need
a business trust rather than an llc or an s corp or they want to need a business trust rather than
an ir llc most of these people are in california and they've got sold on one thing 800 fee
if you use a business trust there's no 800 fee in california you don't want to pay the 800 fee
to the state of california and i know there's a lot of people hellbent on that 800 fee they
will do anything they will spend 900 to save an 800 fee let me just to make a couple points
i don't know any attorney that really sets up business trusts for the typical small business
for rental properties for iras that stands by them i just don't run into them you never hear
other lawyers talk about them we don't see hi super high net worth clients any sophisticated
clients using them the only ones we see using them or that bring it up are ones that got sold
it from someone who's not an attorney who sells it at a holiday inn for asset protection and all this
they don't work i can't tell you how many issues i've had with clients that have set these up
that have bought properties with them they go to sell them no one knows what the hell it is
this the the the title company's like what is this this state doesn't have business trust i know it's
a delaware business trust okay but you're in california i had an arizona client with that
they're like yeah we don't recognize that here they wouldn't transfer the property the person
had to unwind the whole thing deed the property back to the person they bought the property for
have them deed it back to them into a new into their personal name actually then they
were able to sell the property it was a total nightmare tens of thousands of legal fees to fix
these things are clunky some people what's happening is they're selling you a business
trust but they're setting up a revocable trust and so everyone's confused on what
the heck it is so it kind of works because like the title company or the bank or something's like
oh this is just like a revocable living trust like for your estate plan uh yeah okay all right
and so somehow it's it's working in certain instances but it's really not that's not what
it is right like it's not a trust that when you die someone gets this and and so these
business trusts i don't recommend them we don't set them up if you want an ira to own one um just
get an opinion from an attorney that's setting them up we require that for our llcs anyways
not only our law firm lots of other lawyers that set up irlcs here with us i don't see one that'll
put a letter together for a business trust owned by an ira so watch out for the business trusts
if you have one i probably look at getting rid of it um and if you're considering one
i would take a step back and get a professional opinion or the person who's setting it up
ask them what their credentials are are they a lawyer are they really standing by this and
setting things up for their clients every day or is this someone that's you met at a seminar
hawking trusts as a state as asset protection and they sell you on it because you don't have
to pay 800 bucks the state of california yeah i that was i didn't love that i didn't love
that that wasn't good fun for me sorry guys now let me throw out a couple other thoughts where
someone came up with the idea that business trusts could save taxes that's that's that
genesis of some nut job that we're talking about business trusts been around since like the 1890s
when large conglomerates started to use business trust to consolidate operations and holdings uh
john d rockefeller used a business trust but it wasn't to save on taxes it was and then they got a
under attack for abusive um conglomerate what do they call anti-trust issues of controlling
monopolies through these trusts so business trusts have been around a long time matt and i know what
business trusts are but they weren't set up to avoid taxes number two business trusts are also
on the irs dirty dozen on a regular basis these complex trusts to somehow avoid taxes um are
consistently on the taxpayers should be aware that this is right off the irs dirty dozen abusive tax
evasion arrangements involving trusts will not produce the tax benefits advertised by their
promoters this could be foreign trusts it could be onshore trusts and this is exactly why people
get in go to jail because someone talked him into this structure so just freaking we want to
be aggressive we want to save taxes we want to try to find the best loopholes for our clients
that are legit but when someone's trying to sell you into an irrevocable trust just remember the
word irrevocable very difficult to unwind they can cause a lot of problems and and the irs is
not a fan which i'm not trying to be get the irs's to follow me on instagram but just be
be careful people there's my take yeah and i just say i know people be like well i know look matt
it's a delaware business statutory business trust okay are you in delaware i'm in california okay
and here's the california franchise tax guidance they say they don't charge an 800
fee to business trusts okay does that mean that that structure is a legit way of operating
in california i mean i just it's not it's not answering the question and i'm just saying
you never see professional attorneys or you know recommending this it's kind of just like a
i don't know i don't love it you'll never be happy at the end i just i just
feel like i'm i'm like cleaning them up more than i'm ever seeing anyone
happy with it yeah the same thing with the c-corps in nevada or florida you