DOCSLIB.ORG

In with the New

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
In with the New CONNECTICUT TRUST LAW CAROLYN A REERS IN WITH THE NEW An examination of Connecticut’s new trust law BY CAROLYN A REERS ABSTRACT • On 1 January 2020, Connecticut’s new Public jurisdiction, called probate courts, control Act No. 19-137 (the Act) came into effect, virtually all aspects of administering and significantly modernising its trust law. The Act managing testamentary trusts. includes changes and additions to substantive trust law, as well as to more procedural matters • A key provision of the Act includes an 800- affecting trusts and their beneficiaries. year perpetuity period for trusts. Previously, Connecticut law did not allow for long-term • Connecticut is the 35th state in the US to enact ‘dynasty trusts’ (trusts that continue for multiple the Uniform Trust Code in some form. Once generations) and included the traditional approved by the Uniform Law Commission rule against perpetuities (RAP) that requires (ULC), it is up to each state to consider and non-charitable trusts to terminate within enact the law, often amending the law to approximately 90 years of creation. The Act comport with its historical jurisprudence makes it possible to create a trust in Connecticut or to satisfy the particular needs or desires that can last up to 800 years, thus providing an of its constituents. This article will examine opportunity for creating dynasty trusts. As a Connecticut’s enactment of the Act, which result, Connecticut residents no longer have to includes variations required by Connecticut’s turn to other jurisdictions to create and administer bifurcated court system where courts of limited dynasty trusts. MARCH 2020 17 WWW.STEP.ORG/TQR CONNECTICUT TRUST LAW CAROLYN A REERS n 1 January 2020, Connecticut’s new beneficiaries of irrevocable trusts who have Public Act No. 19-137 (the Act) came attained 25 years of age; and into effect adopting theConnecticut • provisions dealing with judicial supervision of Uniform Trust Code. It is a long- testamentary trusts. Oawaited, sweeping modernisation of Connecticut Connecticut becomes the 35th state in the US law concerning the formation, modification, to enact the Uniform Trust Code in some form. administration and termination of trusts. The The Act was adopted in 2000 by the Uniform Act creating the new law is more than 90 pages Law Commission (ULC),3 which was established long and includes more than 120 sections. in 1892 with the goal of providing states with Although titled as the Connecticut Uniform Trust ‘non-partisan, well-conceived and well-drafted Code, it actually includes four specific legislative legislation that brings clarity and stability to acts that are key updates to existing Connecticut critical areas of state statutory law’.4 Once the trust law, namely: ULC approves a uniform law, it is up to each state • the Connecticut Uniform Trust Act; to consider and enact the law, often amending the • the Connecticut Uniform Directed Trust Act; law to comport with its historical jurisprudence • the Connecticut Qualified Dispositions in Trust or to satisfy the particular needs or desires of its Act (CQDTA); and constituents. Although the definition of a uniform • the Connecticut Uniform Rule Against act is one that seeks to establish the same law Perpetuities Act.1 on a subject among various jurisdictions, there The Act is expected to significantly are marked differences in the Act between the enhance estate and asset-protection planning states that have adopted it. For example, the Act opportunities available to Connecticut residents, includes variations required by Connecticut’s trustees and beneficiaries and perhaps draw new bifurcated court system where courts of limited trust business to the state. Specifically, the new jurisdiction, called probate courts, control law addresses: virtually all aspects of administering and • the trustee’s duties, powers and liability; managing testamentary trusts. • the rights of creditors; Below are some key highlights of Connecticut’s • the virtual and designated representation of version of the legislation. trust beneficiaries or other parties; and • the establishment of a trust’s principal place DYNASTY TRUST PLANNING of administration. Previously, Connecticut law did not allow for The law also establishes new standards for long-term ‘dynasty trusts’ (trusts that continue the administration of trusts and for individuals for multiple generations) and included the serving as trustees or in other fiduciary capacities. traditional rule against perpetuities (RAP) that Connecticut’s new law applies to virtually all requires non-charitable trusts to terminate trusts with the exception of charitable trusts. within approximately 90 years of creation. The The Act generally allows the terms of a trust possibility of a dynasty trust that extended to override the statutory provisions, with 14 beyond the lives of the grantor’s grandchildren enumerated exceptions.2 was unachievable. Connecticut’s limited trust These exceptions include: term often resulted in a grantor’s inability to • requirements for creating a trust; plan for future generations without having • the duty of a trustee to act in good faith and to hire an out-of-state trustee. States with in accordance with the terms and purposes of more developed trust laws, like Delaware or the trust; Florida, became increasingly attractive because • the power of the court to modify or terminate they authorised trust terms that could last a trust; significantly longer (e.g. 360 years in Florida and • the duty under the new law to comply with in perpetuity in Delaware). certain notice provisions applicable to the 3 Also known as the National Conference of Commissioners on Uniform State Laws. 1 Public Act 19-137 4 www.uniformlaws.org/aboutulc/overview 2 s.5(b) of Public Act 19-137 MARCH 2020 18 WWW.STEP.ORG/TQR CONNECTICUT TRUST LAW CAROLYN A REERS liability associated with managing a closely held ‘Connecticut residents no business and holding concentrated positions. longer have to turn to other Notably, trust directors are subject to the same rules and have the same fiduciary duty and jurisdictions to create and exposure to liability as similarly situated trustees. administer dynasty trusts’ ASSET PROTECTION TRUSTS The new law incorporates the CQDTA, which enables the creation of a self-settled asset protection trust; i.e. a trust created by an individual for the benefit of themselves that can The Act makes it possible to create a trust in shield the individual’s assets from the claims of Connecticut that can last up to 800 years, thus their creditors. Connecticut is the 19th state to providing an opportunity for creating dynasty adopt domestic asset protection trust legislation. trusts. As a result, Connecticut residents no Although the self-settled asset protection trust longer have to turn to other jurisdictions to create is appealing to individuals looking to insulate and administer dynasty trusts. The extended themselves from potential unknown liabilities, the RAP period only applies to trusts created on new law includes stringent requirements that must or after 1 January 2020, meaning the new law be met when creating an asset protection trust for will not stretch the vesting period for trusts the benefit of the grantor, so as not to run afoul of already in existence in Connecticut or trusts that fraudulent transfer laws. Creditors who are not migrate into the state from elsewhere. However, barred by these rules have a ‘clear and convincing’ it presents the opportunity for multi-generational evidence standard of proof to overcome. wealth planning going forward. Grantors cannot avoid existing known creditors, and the exemption from the claims of existing DIRECTED TRUSTS unknown creditors applies four years after the Prior to this legislation, trustees in Connecticut creation of the trust or one year after it was retained full responsibility (and liability) over reasonable for the creditor to discover the transfer, how trust assets were managed, invested and whichever is later. The CQDTA includes a class of distributed. The new legislation allows a trustee’s exemption creditors who are not precluded from duties, and liability for the performance or non- making claims outside of the four-year and one- performance of those duties, to be allocated year rules. These include a spouse or former spouse between the trustee and other individuals who who was married to the grantor at or before the may be better able to carry out certain trust time of funding the trust, but only with respect to objectives. By establishing a directed trust, a agreements or support and property orders in place grantor can now appoint a trust director, that is, a prior to creating the trust. In addition, all children non-trustee individual with authority to manage who have a support order in place prior to the a specific part of the trust administration. For transfer of assets to the trust are exception creditors. example, a grantor can appoint a trusted family Among the other prerequisites to creating an member as trustee to oversee distributions effective asset protection trust under the CQDTA, and appoint a different individual or a trust the trust must: company as the trust director to handle • be governed under Connecticut law; investment decisions. This bifurcation of the • be irrevocable; traditional roles of the trustee is most useful • include a spendthrift clause (i.e. a provision that in situations where trusts hold concentrated prevents the beneficiary from assigning their investments or assets, such as a closely held interest in the trust); and business or significant amounts of real estate. • appoint an independent trustee to make Professional trustees typically resist accepting distributions to the individual creating the trust. investment responsibility for those trusts due to If done properly, a self-settled asset protection the specialised skills required and the potential trust will enable individuals to protect their MARCH 2020 19 WWW.STEP.ORG/TQR CONNECTICUT TRUST LAW CAROLYN A REERS personal assets in a way similar to how limited claims of creditors, as long as the trust agreement liability companies are used to protect expressly provides the trustee with the requisite business assets.
Load more

Recommended publications
  • Spring 2014 Melanie Leslie – Trusts and Estates – Attack Outline 1
    Spring 2014 Melanie Leslie – Trusts and Estates – Attack Outline Order of Operations (Will) • Problems with the will itself o Facts showing improper execution (signature, witnesses, statements, affidavits, etc.), other will challenges (Question call here is whether will should be admitted to probate) . Look out for disinherited people who have standing under the intestacy statute!! . Consider mechanisms to avoid will challenges (no contest, etc.) o Will challenges (AFTER you deal with problems in execution) . Capacity/undue influence/fraud o Attempts to reference external/unexecuted documents . Incorporation by reference . Facts of independent significance • Spot: Property/devise identified by a generic name – “all real property,” “all my stocks,” etc. • Problems with specific devises in the will o Ademption (no longer in estate) . Spot: Words of survivorship . Identity theory vs. UPC o Abatement (estate has insufficient assets) . Residuary general specific . Spot: Language opting out of the common law rule o Lapse . First! Is the devisee protected by the anti-lapse statute!?! . Opted out? Spot: Words of survivorship, etc. UPC vs. CL . If devise lapses (or doesn’t), careful about who it goes to • If saved, only one state goes to people in will of devisee, all others go to descendants • Careful if it is a class gift! Does not go to residuary unless whole class lapses • Other issues o Revocation – Express or implied? o Taxes – CL is pro rata, look for opt out, especially for big ticket things o Executor – Careful! Look out for undue
    [Show full text]
  • Chapter 58A: Kansas Uniform Trust Code Article 1: General Provisions and Definitions Statutes
    KANSAS STATUTES (source: www.kansasstatutes.lesterama.org) Chapter 58a: Kansas Uniform Trust Code Article 1: General Provisions And Definitions Statutes: • 58a­101: Short title. • 58a­102: Scope. • 58a­103: Definitions. • 58a­104: Knowledge. • 58a­105: Default and mandatory rules. • 58a­106: Common law of trusts; principles of equity. • 58a­107: Governing law. • 58a­108: Principal place of administration. • 58a­109: Methods and waiver of notice. • 58a­110: Others treated as qualified beneficiaries. • 58a­111: Nonjudicial settlement agreements. • 58a­112: Rules of construction. • 58a­101: Short title. This act may be cited as the Kansas uniform trust code. History: L. 2002, ch. 133, § 1; Jan. 1, 2003. • 58a­102: Scope. This code applies to express trusts, charitable or noncharitable, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust. History: L. 2002, ch. 133, § 2; Jan. 1, 2003. • 58a­103: Definitions. As used in this code: (1) "Action," with respect to an act of a trustee, includes a failure to act. (2) "Beneficiary" means a person that: (A) Has a present or future beneficial interest in a trust, vested or contingent; or (B) in a capacity other than that of trustee, holds a power of appointment over trust property. (3) "Charitable trust" means a trust, or portion of a trust, created for a charitable purpose described in subsection (a) of K.S.A. 58a­405, and amendments thereto. (4) "Conservator" means a person appointed by the court pursuant to K.S.A. 59­3001 et seq., and amendments thereto, to administer the estate of a minor or adult individual.
    [Show full text]
  • Uniform Trust Code Final Act with Comments
    UNIFORM TRUST CODE (Last Revised or Amended in 2010) Drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS and by it APPROVED AND RECOMMENDED FOR ENACTMENT IN ALL THE STATES at its ANNUAL CONFERENCE MEETING IN ITS ONE-HUNDRED-AND-NINTH YEAR ST. AUGUSTINE, FLORIDA JULY 28 – AUGUST 4, 2000 WITH PREFATORY NOTE AND COMMENTS Copyright © 2000, 2010 By NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS April 10, 2020 1 ABOUT NCCUSL The National Conference of Commissioners on Uniform State Laws (NCCUSL), now in its 114th year, provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law. Conference members must be lawyers, qualified to practice law. They are practicing lawyers, judges, legislators and legislative staff and law professors, who have been appointed by state governments as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands to research, draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical. $ NCCUSL strengthens the federal system by providing rules and procedures that are consistent from state to state but that also reflect the diverse experience of the states. $ NCCUSL statutes are representative of state experience, because the organization is made up of representatives from each state, appointed by state government. $ NCCUSL keeps state law up-to-date by addressing important and timely legal issues. $ NCCUSL’s efforts reduce the need for individuals and businesses to deal with different laws as they move and do business in different states.
    [Show full text]
  • Lecture Notes Chapter 13 I
    LECTURE NOTES CHAPTER 13 I. Scope of the Chapter A. Various kinds of trusts, including living trusts, are identified and discussed. B. The classification of trusts and an examination of a private express trust lead to a detailed discussion of the living trust. C. The steps necessary for drafting trusts, including the accumulation of data through appropriate checklists, are outlined. II. Classification of Trusts A. All trusts are either express or implied. 1. An express trust is created or declared in explicit terms for specific purposes and is represented by a written document or an oral declaration. a. Express trusts fall into the following subcategories. (1) Private or public (charitable) trusts (2) Active or passive trusts (3) Inter vivos or living trusts b. The most common types of express trusts are testamentary and living trusts. 2. Implied trusts are created not by the settlor’s express terms but by the presumed intent of the settlor or by a decree of the court. B. Express Trusts—Private versus Public (Charitable) 1. A private trust is created expressly either orally or in writing between a settlor and a trustee(s) who holds legal title to property for the financial benefit of a beneficiary. a. It is one of the most common types of trusts. b. The essential elements of an express private trust are as follows. (1) The settlor must intend to create a private trust. (2) A trustee must be named to administer the trust. (3) A beneficiary must be named to enforce the trust. (4) The settlor must transfer sufficiently identified property to the trust.
    [Show full text]
  • The Rule Against Perpetuities: a Survey of State (And D.C.) Law
    THE RULE AGAINST PERPETUITIES: A SURVEY OF STATE (AND D.C.) LAW At common law, the rule against perpetuities provided that: No [nonvested property] interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest. Gray, The Rule Against Perpetuities § 201 (4th ed. 1942). Under the common law rule, the interest was invalid unless it was certain on the date the interest was created that it would vest within 21 years after the death of the last designated life in being at that time (the “common law period”). The common law rule ignored any events that occurred after the interest was created, and focused only on what was certain to occur or not to occur when the interest was created. The common law rule remains intact in only three states, however – Alabama, New York, and Texas. Three more states – Iowa, Mississippi and Oklahoma – have the common law rule, with the “wait-and-see” modification that determines whether an interest was valid based on whether it actually vested within the common law period, rather than whether it had to do so in all events. The beginning of the movement away from the common law rule began in 1979, when the Restatement (Second) of Property suggested that this approach was unreasonable, because it ignored events that, in some cases, had already occurred before the court or the parties had to determine the validity of the interests created. Restatement The Rule Against Perpetuities, 50-State Survey, Page 1 DISCLAIMER ON USE: The reader is cautioned to confirm the information provided in this Survey by independent research and analysis to ensure that it is accurate, complete, and current.
    [Show full text]
  • Taxationâ•Flapportionment of Estate Taxes Among Individual And
    Buffalo Law Review Volume 12 Number 1 Article 53 10-1-1962 Taxation—Apportionment of Estate Taxes Among Individual And Charitable Legatees Walter W. Miller Jr. Follow this and additional works at: https://digitalcommons.law.buffalo.edu/buffalolawreview Part of the Taxation-Federal Estate and Gift Commons Recommended Citation Walter W. Miller Jr., Taxation—Apportionment of Estate Taxes Among Individual And Charitable Legatees, 12 Buff. L. Rev. 196 (1962). Available at: https://digitalcommons.law.buffalo.edu/buffalolawreview/vol12/iss1/53 This The Court of Appeals Term is brought to you for free and open access by the Law Journals at Digital Commons @ University at Buffalo School of Law. It has been accepted for inclusion in Buffalo Law Review by an authorized editor of Digital Commons @ University at Buffalo School of Law. For more information, please contact [email protected]. BUFFALO LAW REVIEW since it has modified the common law rule. The minority view would call for an extension of the scope of the notice which under a restrictive interpretation would appear to be unwarranted. The protection afforded by lis pendens would not aid the plaintiff in this matter. As hereinbefore mentioned, whether the lis pendens is continued or not will have no bearing on the effectiveness of the court's decision concerning the nuisance, and plaintiff's rights acquired by a favorable judgment can not be lost by a transfer of defendant's interests. Conversely, the notice to a purchaser of the encroachment is obvious without the aid of a pendency in action. The Court's construction of the word "use" is reasonable.
    [Show full text]
  • ELTC Law Group
    ! Protect What’s Yours: 8 Useful Estate Planning Vehicles to Help You Preserve Your Wealth for Your Loved Ones When starting with your estate planning, you will definitely want to get help from a qualified elder law attorney. Prior to this, however, it can be helpful to learn about the different estate planning tools and vehicles that may be right for you. Read on to get a nice overview of eight of the most useful, and effective, estate planning vehicles available today. While they may not all be right for you, it is always helpful to know your options. Last Will & Testament For most people, a Last Will and Testament is the right place to start with estate planning. In fact, a Will is something people should have in place pretty much from the moment they become adults, or at least once they get married or have children. Over the years, Wills can be updated and changed to reflect your position in life. For people with modest estates, a Will may actually be one of the only estate planning documents that they need. Once an estate gets sufficiently large, however, it will almost always be smart to add additional options to your portfolio. Knowing when a Will is enough, and when you will need something more, is an important conversation to have with your estate planning advisor or attorney. Living Trust Once someone ‘outgrows’ a Will, they will typically start using a Living Trust. A trust is a legal contract that you put your assets into. The trust then holds the title, and retains control, of all of the assets within it.
    [Show full text]
  • Rights and Responsibilities of Charitable Beneficiaries in Death-Related Administration of Estates and Trusts
    Rights and Responsibilities of Charitable Beneficiaries in Death-Related Administration of Estates and Trusts Presented By: Fredrick B. Weber Sr. Vice President – Estate Settlement Services The Northern Trust Company 50 S. LaSalle Street, B6 Chicago, IL 60603 312/444-4702 [email protected] Based on Materials Originally Written By: Stacy Singer Fredrick B. Weber Sr. Vice President - Fiduciary Practice Leader Sr. Vice President – Estate Settlement Services Northern Trust Company Northern Trust Company 50 S. LaSalle Street B-4 50 S. LaSalle Street, B-6 Chicago, IL 60603 Chicago, IL 60603 312/444-3826 312/444-4702 [email protected] [email protected] These materials are intended to provide information about the subject matter covered and are designed to serve as a point of reference for conference participants. These materials are distributed and presented with the understanding that the authors and the presenter are not rendering any legal, accounting, financial, or other professional services or advice. Attorneys or other professionals using these materials or any orally conveyed information in dealing with a specific client’s or their own legal or financial matters should research original and fully current sources of authority. 1 I. Introduction In the process of death-related administration of estates and trusts, why is it that transparency often seems so elusive even to those who are entitled to some sort of disclosure by the personal representative and/or the trustee? This is particularly intriguing since the Uniform Probate Code, which has been
    [Show full text]
  • Probate September 2005.Indd
    Probate and Trust Law Section Newsletter No. 112 Published by the Section on Probate and Trust Law of The Philadelphia Bar Association August 2005 Have a restful and rein- vigorating summer – we’ll see you Report of the Chair in the fall! By JULIA B. FISHER The Probate Section – as usual through our hard-working and amazingly productive committees – has had a number of opportunities so far this year to respond to “late breaking” developments that impact all of its members. In late December of 2004, the Treasury published sweeping revisions to the Circular 230 regulations that establish standards of practice for tax pro- Inside this fessionals. The changes, for the most part, became effective on June 20, 2005. The Education Committee worked with the Tax Section on very short notice to Issue........ prepare an outstanding April 19 presentation on “Giving Tax Advice after June 20: Can You Comply with Circular 230?” Comment Letter to the IRS.....................2 On April 18, 2005 the IRS released Revenue Procedure 2005-24 which imposes new rules and requirements for charitable remainder trusts created after June 28, 2005. The Legislative Committee leaped into action and prepared a Section Events comment letter to the Service – you can find a copy of their work in this issue Calendar.......................3 of the newsletter. In addition, the Committee will consider a legislative solution to the issues the Revenue Procedure creates for Pennsylvania practitioners. The Family Office Phenomenon................4 Another project in which members of the Section are participating is the recently launched Philadelphia Register of Wills’ website and computerization project.
    [Show full text]
  • Senate Substitute
    2021 SESSION SENATE SUBSTITUTE 21103695D 1 SENATE BILL NO. 1435 2 AMENDMENT IN THE NATURE OF A SUBSTITUTE 3 (Proposed by the Senate Committee on the Judiciary 4 on February 3, 2021) 5 (Patron Prior to Substitute±±Senator Hanger) 6 A BILL to amend and reenact §§ 32.1-291.7, 54.1-2982, 54.1-2983, 54.1-2984, 59.1-481, 64.2-100, 7 64.2-403, 64.2-404, 64.2-407, 64.2-450, and 64.2-701 of the Code of Virginia and to amend the 8 Code of Virginia by adding in Chapter 4 of Title 64.2 an article numbered 7, consisting of sections 9 numbered 64.2-459 through 64.2-468, relating to electronic execution of estate planning documents; 10 Uniform Electronic Wills Act. 11 Be it enacted by the General Assembly of Virginia: 12 1. That §§ 32.1-291.7, 54.1-2982, 54.1-2983, 54.1-2984, 59.1-481, 64.2-100, 64.2-403, 64.2-404, 13 64.2-407, 64.2-450, and 64.2-701 of the Code of Virginia are amended and reenacted and that the 14 Code of Virginia is amended by adding in Chapter 4 of Title 64.2 an article numbered 7, SENATE 15 consisting of sections numbered 64.2-459 through 64.2-468, as follows: 16 § 32.1-291.7. Refusal to make anatomical gift; effect of refusal. 17 A. An individual may refuse to make an anatomical gift of the individual©s body or part by: 18 1.
    [Show full text]
  • Standing, Capacity, and Necessary Parties in Trust Litigation
    STANDING, CAPACITY, AND NECESSARY PARTIES IN TRUST LITIGATION Presented by: LAURIE RATLIFF, Austin Ikard Ratliff, PC Written by: FRANK N. IKARD, JR. ADAM HERRON Ikard Ratliff, PC Austin State Bar of Texas 42ND ANNUAL ADVANCED ESTATE PLANNING & PROBATE June 13-15, 2018 Dallas CHAPTER 15 © Frank N. Ikard, Jr. Laurie Ratliff Shareholder, IKARD RATLIFF P.C. 2630 Exposition Blvd., Suite 118 Austin, Texas 78702 [email protected] | 512.472.4601 BOARD CERTIFICATION Civil Appellate Law - Texas Board of Legal Specialization JUDICIAL CLERKSHIP and COURT EXPERIENCE Briefing Attorney - Seventh Court of Appeals, Amarillo (Justice John T. Boyd) Staff Attorney - Third Court of Appeals, Austin EDUCATION Texas Tech University School of Law - J.D. 1992 Research Editor, Texas Tech Law Review University of Texas at Austin - B.B.A. 1989 SELECTED COMMUNITY SERVICE, ACTIVITIES and HONORS St. Andrew’s Episcopal School – Board of Trustees (2016-19); Financial Development Committee member (2013-14; 2014-15); Co-Chair Annual Fund (2013-14; 2014-15) The Settlement Club (non-profit supporting The Settlement Home for Children) Board of Directors (2008-15) Selected as a Super Lawyer by Law & Politics and Texas Monthly magazine (2005-16) AV Peer Review Rating by LexisNexis Martindale-Hubbell Third Court of Appeals Pro Bono Committee member (2008-2014) Life Fellow, Texas Bar Foundation Past Chair, Travis County Bar Association Civil Appellate Section SELECTED PRESENTATIONS and PAPERS • “Case Law Update” UT 12th Annual Advanced Texas Administrative Law Seminar
    [Show full text]
  • Choice of Entity Considerations for Charitable Organizations
    Texas A&M University School of Law Texas A&M Law Scholarship Faculty Scholarship 3-2012 Choice of Entity Considerations for Charitable Organizations Terri Lynn Helge Texas A&M University School of Law, [email protected] Follow this and additional works at: https://scholarship.law.tamu.edu/facscholar Part of the Business Organizations Law Commons, and the Nonprofit Organizations Law Commons Recommended Citation Terri L. Helge, Choice of Entity Considerations for Charitable Organizations, 39 Tex. Tax Law 17 [1] (2012). Available at: https://scholarship.law.tamu.edu/facscholar/629 This Article is brought to you for free and open access by Texas A&M Law Scholarship. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Texas A&M Law Scholarship. For more information, please contact [email protected]. S pr ing 2012 V ol. 39, No. 3 w ww.texastaxsection.org 2 Choice of Entity Considerations for Charitable Organizations By: Terri Lynn Helge1 I. Introduction. This article discusses choice of entity issues related to the formation, operation and governance of nonprofit organizations, highlighting the distinctions between charitable organizations formed as charitable trusts and charitable organizations formed as nonprofit corporations. In determining the legal structure for a new nonprofit entity, considerations that need to be taken into account include: (1) ease/speed of formation; (2) limitation of liability for members and directors; (3) financial resources; (4) type and scale of activities to be conducted; (5) governance requirements; (6) capacity to own property and contract; (6) capacity to sue and be sued; (7) liabilities to third parties; (8) permanence of the organization; and (9) ease of dissolution.
    [Show full text]