Laws, Regulations & Annotations

C

220.0000 CHANGE IN OWNERSHIP

Annotation 220.0816

220.0816 Trusts—Massachusetts or Business Trust. Whether trusts fall into the business trust or the non-business (or "ordinary" or "traditional" trust) category is generally a question of fact. First, business trusts differ from the common-law (traditional) trust in that the purpose of the traditional trust is to conserve property, with incidental powers of sale and investment, while the acknowledged goal of the business trust is to carry on a business enterprise for profit. Without a business purpose, a Trust cannot qualify as a business trust. Additionally, a business trust is formed by the voluntary, consensual act of the parties, and is based upon contract. In contrast, the beneficiaries of ordinary trusts do no more than accept the benefits thereof by gift from the settlor, and are not the voluntary planners or creators of the trust arrangement. Furthermore, the certificates representing shares of beneficial interest in a business trust resemble shares in a corporation and are issued and transferred in a similar manner. Holders are entitled to share ratably in the income of the trust and, upon termination of the trust, in the proceeds of the business. They also have the same right to examine the records of the trustee as do shareholders in a corporation. Further, a court will examine the "economic realities of the situation" to determine the validity of a business trust. If a trust is a valid business trust, it should be regarded as a legal entity for property tax law purposes. Therefore, the legal entity rules governing transfers of property to and from legal entities would apply. C 9/10/2012.