An Employee Ownership Trust (EOT) exists to benefit both current and future employees. With looser ties to the Internal Revenue Code and U.S. Department of Labor regulations, forming an EOT is likely to be less costly than an ESOP.
This type of employee ownership found popularity in the United Kingdom before the United States had created tax breaks for employee-owned companies. Therefore, this structure exists very differently than other forms of employee ownership.
Unlike other forms of employee ownership, '“ traditionally are perpetual trusts and hence can last indefinitely” which “may appeal to owners who want to create a legacy business that continues to operate for the benefit of the employees or the community.”
For a detailed explanation of the origin of Employee Ownership Trusts and how exactly they benefit the owner, read the full article below.