How to Set Up a Legal Defense Trust
- 1). File with the appropriate state authorities as a charitable trust. Depending on your state these filing requirement may vary and, if required, filing may be possible online. For instance, in California, the California Attorney General's office is assigned with the responsibility of governing charitable trusts. This office allows California trusts to file online at the Attorney General's website. (Reference 1) The IRS provides a state-by-state directory of state-level governing entities which is available in the resources section below this story.
- 2). Register the name of the trust with your state's Secretary of State's office. This will help prevent confusion with other entities which may have a similar name.
- 3). Determine the mission of the legal defense trust prior to filing with the Internal Revenue Service (IRS). This is an important step as your trust will fall under various tax structures depending on the mission of the trust. For instance, a legal defense trust fund formed to benefit a segment of the public as a whole may be able to organize under section 501(c)(3) as a tax-exempt group. This organization status will not only exempt the trust from taxes but allow the defense fund to receive tax deductible contributions. However, if the mission of the trust is to benefit a single individual then the fund may need to organize under tax law in a form which will require taxation. (Reference 2)
- 4). File for recognition under the appropriate IRS tax classification.
- 5). Secure an employer identification number (EIN). Do this prior to opening a bank account for the trust. You will need an EIN in order to open a bank account. You can apply for an EIN online through the IRS website. (Reference 3)
Source...