As you begin to create your estate plan, one item that will be important to keep in mind is your investments. It is typical when creating your estate plan to focus mainly on your personal material assets, including homes, cars, and property. However, creating a plan for your investments is just as important to include in your estate planning process. And, with investments having a strong potential for growth, leaving loved ones your investments in your Trust can be a wonderful gift to show your children or grandchildren your love.
However, with investments, especially angel investments, being an often intangible form of assets, it can be hard to know how best to go about leaving your angel investments within a Trust. Trust & Will, the leader in online estate planning services, understands how frustrating it can be to not know where to start in adding your angel investments to a Trust. That is why in this article we are going over how to put your angel investments in a Trust and how they are handled within one.
Keep reading to learn the answers to the following questions regarding putting angel investments in a Trust:
What is an angel investment?
Before understanding how to add an angel investment to a Trust, you will first need to understand what an angel investment is and if your investment falls under this category. Generally, investments that are made on startup companies are those that are labeled angel investments. The term “angel” comes from the reality that when investing in a startup company, there is no guarantee that the company will be successful with the investment you provide them to get their company started. However, you are giving them their chance to hit the ground running and make their dream a reality by having the funds to start their company, thus making you their “angel.”
What are the steps you must take to put your angel investments in a trust?
With the greater level of risk involved in angel investments also comes the potential for a greater level of reward. However, there is also the potential that the return on investment may not come for several years, and may not even see fruition until you are no longer here to see it. With this in mind, it is even more crucial to ensure that you have a proper plan in place to pass on your angel investments to a loved one who will be able to see the profit of your investments. The best way to go about doing this is through a Trust.
Through a Trust, you are able to seamlessly pass on the ownership of angel investments after your passing while allowing your loved ones to bypass the probate court process entirely. Often, the process of transitioning your assets to your beneficiaries through the court can be costly and time-consuming. Including your angel investments in your Trust will allow your beneficiaries to skip the probate process, which is a huge benefit of choosing to put your angel investments in a Trust.
Collect your documents
In order to put your angel investments within a Trust, you will want to be sure to keep thorough records of all documents related to your angel investments. With angel investments, there is often less of a paper trail as you often do not see profit gains for a significant period of time. Thus, having proper documentation and proof of your investment will be important. In order to transfer your angel investment to your Trust, you will want to gather these documents and have them at the ready.
Establish your trustee and beneficiary
Before adding your angel investment to your Trust, you will need to establish who will be your trustee—the person who will obtain responsibility for your angel investments until you pass away—and your beneficiary—the person who obtains ownership of the angel investment after you pass away.
It is important to note that you can name yourself as the trustee of your Trust if you choose to. This way, you can maintain ownership and responsibility for your angel investment until you are gone, at which point, your angel investment will then be transitioned over to your chosen beneficiary.
Add it to your trust
Once you have the above items completed, the last step will be to follow the normal steps you would take to add an asset to your existing Trust. If you are just creating your Trust, check out this guide for a more in-depth explanation of what a Trust is and how to go about setting one up.
Can provisions be made regarding your angel investments in a trust?
One of the main benefits of adding your angel investments into a Trust is that provisions can be set for how the money acquired from the angel investment is used. For example, you could state that the funds should be used to buy a home, pay for college tuition, and more. This will allow you to help make sure that important items in your children’s or grandchildren’s life are taken care of, helping to ensure your family is provided for even after your passing. These are just a few of the examples of the types of provisions you could choose when creating your Trust.
At Trust & Will, we want to help ensure that each of your assets is taken care of within your estate plan before your passing, including your angel investments. With our easy-to-navigate online estate planning services, creating your comprehensive estate plan is easier than ever. Take our free quiz to see where you should get started, or compare our different estate planning options today!
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