Are there any provisions in your partnership agreement or by-laws to allow a trust as a partner?
Also, if your club opted out of the new IRS partnership audit rules, you may run afoul of those rules.
Perhaps, Laurie @ BIVIO has more info or thoughts about having a trust as a partner in an investment club.
On Wednesday, May 27, 2020 Larry Reno via bivio.com <club_cafe@bivio.com> wrote:
One of my elderly members just ask me how to change his name in the partnership to his Trust. Does anyone see any problems?
Larry Reno
President
Georgia Chapter of BetterInvesting
Laurie Frederiksen on
Having a members account titled in the name of a trust will mean you cannot "opt out" of the CPAR audit requirements going forward. It will not affect whether you opted out in prior years.
If you do not care about this, the recommendation if you do allow a trust as a member is that you only allow an individual, revocable trust. The fact that you have allowed this type of member should be spelled out in your partnership agreement and something all your members have agreed to.
If you type Trust in the search box in the upper right corner of your screen when you are in bivio, you will find many prior discussions on the topic of having trusts as members of your club.
Laurie Frederiksen Invest with your friends! www.bivio.com
One of my elderly members just ask me how to change his name in the partnership to his Trust. Does anyone see any problems?
Larry Reno
President
Georgia Chapter of BetterInvesting
Larry Reno on
Thanks Laurie. Stay safe.
Larry Reno
President
Georgia Chapter of BetterInvesting
-----Original Message-----
From: Laurie Frederiksen <laurie@bivio.biz>
To: The Club Cafe <club_cafe@bivio.com>
Sent: Thu, May 28, 2020 2:09 pm
Subject: Re: [club_cafe] Change Partner to partners Trust
Having a members account titled in the name of a trust will mean you cannot "opt out" of the CPAR audit requirements going forward. It will not affect whether you opted out in prior years.
If you do not care about this, the recommendation if you do allow a trust as a member is that you only allow an individual, revocable trust. The fact that you have allowed this type of member should be spelled out in your partnership agreement and something all your members have agreed to.
If you type Trust in the search box in the upper right corner of your screen when you are in bivio, you will find many prior discussions on the topic of having trusts as members of your club.
Laurie Frederiksen Invest with your friends! www.bivio.com
One of my elderly members just ask me how to change his name in the partnership to his Trust. Does anyone see any problems?
Larry Reno
President
Georgia Chapter of BetterInvesting
cindy gerke on
We had a 2 members who had trusts. We had them give us a beneficiary form leaving the value of their shares to their trust with club membership remaining in their name. One member died the other left the club.
Cindy Gerke
Coles River Investment Group
On Thu, May 28, 2020, 2:10 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
Having a members account titled in the name of a trust will mean you cannot "opt out" of the CPAR audit requirements going forward. It will not affect whether you opted out in prior years.
If you do not care about this, the recommendation if you do allow a trust as a member is that you only allow an individual, revocable trust. The fact that you have allowed this type of member should be spelled out in your partnership agreement and something all your members have agreed to.
If you type Trust in the search box in the upper right corner of your screen when you are in bivio, you will find many prior discussions on the topic of having trusts as members of your club.
Laurie Frederiksen Invest with your friends! www.bivio.com
One of my elderly members just ask me how to change his name in the partnership to his Trust. Does anyone see any problems?
Larry Reno
President
Georgia Chapter of BetterInvesting
ira smilovitz on
Cindy,
What follows is not legal advice as I am not an attorney, but my understanding of why it is imperative that you seek local legal counsel.
The beneficiary form may not be worth the paper it is printed on. Partnership interests are not the same as bank/brokerage accounts. You and the member should each check with local attorneys ro see if a beneficiary statement has legal force in your state and, if it does, whether the form of your beneficiary statement meets any requirements.
If the beneficiary statement is not valid, the partnership interest would "belong" to the Probate Estate of the decedent. The distribution of probate assets may be very different from those in the trust. If the club pays the withdrawal proceeds to the trust, the club and/or its members, both individually and collectively, could be sued by the executor of the estate to recover the misdirected funds.
From the member's perspective, if the beneficiary statement has no force, he has defeated the purpose of the revocable trust which is typically to avoid probate.
Be very careful with beneficiary statements. I always recommend that clubs do NOT use them unless they have written approval from a local attorney that their beneficiary statement is valid under local law. As an aside, if the member is a resident of a different state than the club's location, I would check with attorneys in both states. This is not something you want to deal with after a death.
We had a 2 members who had trusts. We had them give us a beneficiary form leaving the value of their shares to their trust with club membership remaining in their name. One member died the other left the club.
Cindy Gerke
Coles River Investment Group
On Thu, May 28, 2020, 2:10 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
Having a members account titled in the name of a trust will mean you cannot "opt out" of the CPAR audit requirements going forward. It will not affect whether you opted out in prior years.
If you do not care about this, the recommendation if you do allow a trust as a member is that you only allow an individual, revocable trust. The fact that you have allowed this type of member should be spelled out in your partnership agreement and something all your members have agreed to.
If you type Trust in the search box in the upper right corner of your screen when you are in bivio, you will find many prior discussions on the topic of having trusts as members of your club.
Laurie Frederiksen Invest with your friends! www.bivio.com