7777 / What is a qualified subchapter S trust (QSST)?

A QSST is a trust in which: (1) there is only one current income beneficiary (who must be a citizen or resident of the U.S.), (2) all income must be distributed currently, and (3) corpus may not be distributed to anyone else during the life of such beneficiary. The income interest must terminate upon the earlier of the beneficiary’s death or termination of the trust, and if the trust terminates during the lifetime of the income beneficiary, all trust assets must be distributed to that beneficiary. The beneficiary must make an election for the trust to be treated as a QSST.¹

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1. IRC § 1361(d).