The Joint and Survivor Grantor Trust and the S Election

In this article, the authors explain why, following the death of the first spouse, a joint and survivor grantor trust remains an eligible S corporation shareholder for which no electing small business trust or qualified subchapter S trust election is required until after the death of the surviving spouse.

I. The JSGT

The joint and survivor grantor trust (JSGT) is a non-foreign irrevocable trust jointly created by a married couple and funded by them with S corporation shares, subject to retained joint and survivor borrowing and substitution powers under section 675. Consider the following example.

A married couple, H and W, jointly and equally own1 shares of an S corporation. They create a JSGT for the benefit of their child and transfer the S shares to that trust. By the express terms of the trust agreement, H and W jointly retain powers described in section 6752 that qualify the trust as a permitted S corporation shareholder under section 1361(c)(1)(A) and (2)(A)(i). The jointly retained powers extend to the entire trust and are exercisable for the benefit of H, W, or both at any time while either of them is living. Read More


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