A trust is a contract that specifies the terms in which a party is to control property or assets for the benefit of others, known as beneficiaries. The party or person in charge of the trust is known as the trustee. There are a variety of reasons and benefits to create trusts in Florida and elsewhere. One real estate company is attempting to reorganize itself into a real estate investment trust to avoid paying certain corporate taxes. Trusts can be a great way to protect assets from being taxed in certain ways as well as providing the trust holder control over the trust during his or her lifetime, and then a smooth transition of the property or assets in the trust to its beneficiaries after the trust holder passes.
Lamar Advertising Co. is looking to take advantage of some changes in trust law and has recently announced that it may ask its shareholders to approve restructuring the company into a real estate investment trust. The company said it will ask for a ruling from the Internal Revenue Service on the potential change. The vote is expected to occur in 2013. The company announced the possible restructuring along with its second-quarter earnings report.
Real estate investment trusts are not liable for corporate income tax on earnings distributed to shareholders. Instead, the shareholders will be liable for the income tax on the dividends. However, the real estate investment trust must distribute at least 90 percent of its earnings. The IRS has widened its interpretation of what types of assets can qualify for converting to real estate investment trusts. One of the recent additions to this list of assets is billboards, which works perfectly for Lamar, an advertising firm specializing in outdoor advertising.
Not only can trusts have tax benefits for large corporations, they can also yield many benefits for individuals as well. However, creating a trust can be somewhat complicated in Florida and elsewhere. Therefore, one should gain knowledge of the legal procedures necessary in order to create a valid trust agreement. Additionally, one should also have knowledge of any applicable laws on the state and federal levels to ensure full compliance while seeking to achieve specific financial goals.