Massachusetts business trusts are unincorporated business organizations designed to avoid certain regulations associated with corporations. Sometimes called a “common law trust,” this organizational structure may be right for you, depending upon your business needs. A Boston business formation lawyer can assist you with advice and guidance in setting up a common law trust.
The Basics of a Massachusetts Business Trust
Despite its name, a Massachusetts Business Trust does not necessarily operate within the
commonwealth. Rather, it is so-named for the particular structure that was first established
in Massachusetts. A business trust does not receive a charter from the state as does a corporation. Its status is established by the actions of those who form it.
A business trust may purchase securities and commodities. It is governed by trustees who maintain it for those who hold title. A business trust is established when a written declaration is produced. This is similar to a charter, in that it specifies the duties of trustees, purpose and philosophy, as well as terms. Beneficiaries receive Certificates of Beneficial Interest.
Benefits and Downside to Business Trusts
Massachusetts Business Trusts are treated as corporations by the IRS. Therefore, they do not enjoy the comparative tax advantages of a limited liability corporation. However, trusts allow for much greater internal control. For instance, a trust can more freely and easily acquire other businesses and develop real estate, and certificates of Beneficial Interest are easy to transfer.
If you would like more information about forming a Massachusetts Business Trust, or need assistance with another business matter, call Boston business formation lawyer David Ionson for a consultation today at (781) 674-2562.