SUB-CHAPTER "S" TRUST

Sub-Chapter "S" corporate stock should be transferred to a Living Trust, but only after careful planning has occurred. If stock in an "S" corporation is transferred to a Trust which fails to contain certain detailed provisions for the ownership and disposition of such stock, then this failure could cause termination of the "S" status at the settlor's death and, as a result, trigger extremely adverse income tax consequences for the "S" shareholders.