Business Trusts: What Are They and Can I Put My Business in One?



The principal steps of a RTO are the same as a take-over offer (as set out in paragraph 5.3.5 above) with a preliminary step of the Target Entity acquiring the assets from the acquiror and issuing new units or stapled securityholders in the Target Entity to the acquiror. EHT adopted a master lease arrangement under which affiliates of its sponsor (collectively, the “Master Lessees”), Urban Commons, would lease the hotels from EHREIT. The Master Lessees would in turn enter into franchise agreements with various hotel franchisors to operate under their brands and hotel management agreements with third-party hotel management companies to manage the day-to-day operations of each hotel. In the case of a REIT, a Singapore-constituted REIT must be authorized by the MAS prior to an initial public offering of units to investors in Singapore. Further, a REIT manager is required to hold a CMS Licence for REIT management before it can engage in REIT management. A REIT manager is required to hold a capital markets services licence (“CMS Licence”) for REIT management before it can engage in the regulated activity of REIT management.


With a Examples Of Business Trusts trust, the trustee must distribute business profits directly to the beneficiaries. It’s also prohibited from doing things like touching any principal assets. A business can be owned by multiple trusts and entities or just a single one. They are primarily used to safeguard against taxes and liability, as trusts tend to have different legal protections than individuals. If you need help with a business trust definition, you can post your legal need on UpCounsel’s marketplace.

Costs To Set Up Business Trusts

However, the federal ceiling has historically increased and decreased unexpectedly. These changes often coincide with a change in administrations, Congress being controlled by a new party, or as part of larger tax reforms. This is to say, while you may currently be under the exemption, there is nothing to say you will be in the future. It is thus imperative to plan as though your current exemptions may not last. A statutory business trust is established to engage in business, often between parties which are not family.


This primer provides an overview of the structure of such vehicles, the main regulations regulating them, the process to getting listed on the SGX-ST as well as the various ways of acquiring control of these vehicles post-listing. This primer also explores the lessons to be learnt from the controversy surrounding Eagle Hospitality Trust (“EHT”) and the failed merger between ESR REIT and Sabana REIT. However, he was well respected at the start of his term in office and business trusted him. But business trust is gradually expanded over time as a result of the experience of continuously testing the trust. Houses can be purchased in the name of a business trust to disguise the name of the actual owner. By meeting the requirements of an ESBT, a trust may own S Corporation shares.

Advantages and Disadvantages of Business Trusts

The only caveat of a complex trust is that it must maintain some form of income. This income can include interest or allowing the principal balance to remain. In addition to these provisions, the trust is prohibited from making charitable contributions. The income for beneficiaries is generally taxable even if withdrawals are not made. If the foregoing actions were taken, the merger could perhaps have succeeded. In the merger of CMT and CCT, the respective REIT managers worked together and sweetened the deal by ensuring a higher accretion to their respective distribution per unit and the manager of CMT also waived the acquisition fees due from CMT that amounted to approximately S$111.2 million.

  • To set up a business trust, the business must prove that it’s involved in an authentic business practice.
  • These trusts are generally for families concerned about estate taxes.
  • A REIT manager is required to hold a capital markets services licence (“CMS Licence”) for REIT management before it can engage in the regulated activity of REIT management.
  • An irrevocable trust, by definition, cannot be easily changed or revoked.
  • Under a complex trust, funds can be distributed to charitable organizations and distribute total or partial amounts of the principal to beneficiaries.

During this period, EHT received a notice of default and acceleration in respect of a US$341 million loan it had taken out in connection with its listing. Upon the close of the public offer and provided the SGX-ST is satisfied that the conditions set out in the ETL Letter have been met, the units or stapled securities will be allotted and listing and quotation of the units or stapled securities may commence. BTs, unlike companies, can make distributions out of operating cash flows . They suit businesses which involve high initial capital expenditures with stable operating cash flows, such as real estate assets. Poor planning can erode the value of a trust over time through unnecessary taxation. A Dynasty trust avoids the gift tax , estate tax , and the GST (occurs when transferring assets to a beneficiary that’s at least two generations removed from the giver).