THE ARGUMENT
FOR THE LLT
THE PROBLEM
We are trusts lawyers who grew tired of being asked “did you say ‘revocable,’ or ‘irrevocable?’”
THE SOLUTIONS
Trusts lawyers long ago solved the first half of this problem by creating the informal synonym “living trust.” But “irrevocable trust” had no such informal synonym - until now.
WHY IT WORKS
It seems that US investors who already own LLC and LP interests feel comfortable with LLT language.
THE LAW BOOKS
The LLT is not a new trust type. It’s simply an informal shorthand umbrella term for a long list of well-proven US trust types. So, the LLT term is not very helpful in a roomful of lawyers. But it can be helpful in a roomful of non-lawyers.
NON-PROFIT
This effort is not for profit. It’s our way of giving back to the community. There is no related patent, trademark, copyright, drafting software, or proprietary investment offering. Just a good idea you’re free to use - a simple tool for improving communication between lawyers and non-lawyers.
THE COUNTERARGUMENT
AGAINST THE LLT
The term “irrevocable trusts” itself is an oversimplification. It is so misleading and imprecise that we would all be better off without it. So, a more memorable synonym for the term does not help anyone with anything. The confusions that spring from the “irrevocable trusts” concept include, but are not limited to:
1) ‘Irrevocable’ trusts, in practice, are not unamendable or irrevocable at all, as they can often be changed.
2) Not all "irrevocable trusts” offer all of the several possible “limited liability” protections. Lumping them together is misleading about liability limitations.
3) Different “irrevocable trusts" are taxed very differently. Lumping them together is misleading about income, gift, and estate taxes.
4) Unlike LLCs, LLPs or LPs, a trust isn’t a business entity, so the “LLT” term may give the wrong impression.
For these reasons and others, the “LLT” term may further entrench a misleading concept of the "irrevocable trust.”
At best, "LLT" can be a conversation starter—one way to begin a deeper discussion about the many important aspects of trusts law
Our nonprofit mission: to explore the potential of the term “Limited Liability Trusts” in the legal lexicon.
INVITATION
If you are a trusts professional with a strong opinion about this - whether positive or negative - we’d love to hear from you.
CONTACT US
A NOTE ON HISTORIC USAGE:
We recognize that on rare occasions, “Limited Liability Trusts” terminology has appeared before. It makes one appearance in the Connecticut Statutory Trust Act, historic occurrences in the common law of Massachusetts, and likely has appeared elsewhere. It also exists within the term “Limited Liability Trust Company,” which is a very different usage.
