I know very little about trust. If a member has a trust, do all their assets go into the trust, or do they designate which go in. With the new tax laws, we are to identify if someone has a trust. I am not clear if the rules mean their Investment Club membership is in a trust, or if it means if they have anything in a trust. It is stated you cannot opt out of having a partnership if a member is in a trust. We have never asked our members if they have a trust or is their Investment club in a trust. Should we ask each member? Should we have forms for members to fill out when they join asking questions like, are you a citizen, do you have a trust, do you have a relative in this club, etc. What other questions would we ask?
I might be making too much out of this, but I do not want to have the IRS checking me and my friends out.

Diana Evans

Diana:

1. When filing the investment club partnership federal tax
return, the only focus is whether one of the partners is a
trust. Whether individuals have put other assets into a
trust is not relevant. Until the steps described in 2. below
have been followed, the individual partner's interest in the
partnership is still held as an individual.

2. To have a trust as a partner, the following steps are
needed:
     a. The partnership agreement should authorized a trust
     as a partner. To keep it simple, only "living trusts"
     should be allowed and the death of the trustor should
     trigger an automatic withdrawal the same as the death
     of the individual. You don't want the trust to continue
     as a partner with successor trustees participating.
     b. If a current member wants to put their individual
     partnership interest into a living trust, the member
     should present a written request to transfer ownership
     of the interest from the individual into the trust. The
     partners should then make a motion and vote to accept
     the transfer. When approved, the trust name should
     appear on the partnership records as the legal owner;
     e.g. the roster in bivio should have the trust name;
     the K-1 should be in the trust name (usually the trust
     uses the same social security number as the trustee).

3. When a new member wants to join a club that allows
trusts, you should ask whether the new member wants their
ownership interest in the club to be their trust. If so,
then the membership forms should name the trust as the
owner.

As you will see by my bivio email address, my club allows
living trusts and several members have put their ownership
interest in the partnership into their trusts. With the
value of the units we own, failure to have the ownership
interest in trust would mean that a probate would have to be
processed just for the ownership interest in the club. The
reason that we have the trust to avoid.
When individual trustor dies, we will process the exit the
same as the death of an individual partner and make the
check payable to the trust. Easy peasy for the club and the
decedent's survivors.

Jack Ranby, Treasurer
Grants Partners Investment Club