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This question is about careers.
What is a business trust?
A business trust is a legal agreement that can be utilized when assigning the authority to oversee a beneficiary stake in a specific business. Business trusts can also be used to run a specific business itself.
A business trust functions much the same as family trusts in that it assigns control of a specific business's assets to a trustee, who then manages the trust in the stead of the grantor or beneficiaries.
The business trust trustee has a responsibility to act in a monetarily beneficial manner in regard to the grantor or beneficiaries.
There are three different kinds of business trusts:
Simple Trust:
A simple trust is a business trust where its status must be recognized by the IRS. In this type of trust the trustee must give profits of the business directly to the beneficiaries. The trustee is also not allowed to do things like manipulate any principal assets.
Grantor Trust:
This type of trust consists of a trustee, a grantor, and a beneficiary. Grantor trusts are extremely self-contained. The grantor agrees to pay taxes on the earnings from the trust and has complete power over it. This power includes payments directed to beneficiaries.
Complex Trust:
This type of trust is kind of the opposite of a simple trust. However, it is still not overseen by the beneficiaries of the trust. In addition to business earnings being distributed amongst beneficiaries, profits may also be given to other organizations, such as charities. In order to preserve its status as a complex trust, the trust must have some form of earnings.
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