A "shareholder trust" is a trust which holds shares in
a corporation. For purposes of this discussion, it also could
relate to a trust holding an interest in a limited liability
company or partnership.
In recent years, estate planning has resulted in the use of
trusts holding interests in family businesses, as trusts are
intended to be multigenerational in duration. This significant use
of long-term shareholder trusts to hold interests in family-held
enterprises raises some interesting questions about the
relationship of the individual family member beneficiaries to the
entity.
In particular, do any duties exist that run from the entity or
those in control of the entity directly to the beneficiaries? This
is an important question, given the use of long-term trusts holding
interests in family-controlled businesses.
