Estate Planning can come in many different forms, but one frequent option is Trust-Based Estate Planning. This form of planning focuses on creating a Living Trust for you. A Living Trust is a legal document that assigns Trustee’s responsibility over your assets for when you eventually pass away. Your assets can include anything from clothing, to bank accounts, to business interests, and much more.
This may be the first time you have ever heard about Living Trusts, and you may want to know why they are important. Trusts are important documents that help you to plan where your assets will go in the event of your death. This is beneficial because it ensures you have ultimate control over where your assets go and who gets what when you pass.
Additionally, it also makes the transition of your assets from you to another person much easier. Often, assets that are listed in your name alone will have to go through probate after you die. Having a Living Trust will help to eliminate some of these extra steps and fees. This makes the transfer of your belongings much simpler for your loved ones and takes added pressure off of them during this already emotionally charged time.
To fund your Trust, you will want to transfer some of your assets to your Trust. However, the process for each type of asset you want to transfer to a Trust will vary. Trust & Will, a leader in online Estate Planning, recognizes how confusing this can become and wants to help make the process easier.
Because there are many different forms of business structures, this article will go through the most common ones to provide you with more information on how to transfer your business assets to a Trust. Some types of business interests include:
Transferring Business Interests to a Trust for Each Business Type
With there being so many distinctions for transferring different types of business assets, it can be easy to want to put off transferring them to your Trust. However, it is extremely beneficial to take care of it now, before it is too late.
When it comes to limited partnerships and LLCs, or limited liability companies, the business interest of the company is only partly yours. However, you can transfer your portion of the business interest to a Trust as long as you secure a document of transfer, sometimes called an Assignment of Interest. This document will state that you are choosing to transfer your portion of the interests over to a Trust.
It will be important to also give a copy of this document to your partners so that they are made aware of the situation. This is a necessary step because the LLC or limited partnership will most likely require updated paperwork to state that your share of the business interest is now in a Trust with you as the Trust and Beneficiary. Together, you and your partners will want to sign a document agreeing to the change.
Before you proceed with transferring your business interest to a Trust, you will first want to review the terms and conditions your limited partnership/LLC has set forth to determine if there are any additional rules for transferring business interests to a Trust.
The process for transferring business interests in general partnerships is very similar to that of limited partnerships/LLCs. Once again, you will have to complete a document, often called the Assignment of Business Interest, that states you want to transfer your business interests to a Trust. After you have completed that document, you will again want to talk to your partners and have them sign an agreement to allow your Trust to replace you as an owner of the business in legal documents.
You will also want to review the terms and conditions of your specific partnership to ensure that you are following all guidelines your partnership has set out when transferring business interests to a Trust.
For business interest transfers regarding corporation stock, it is once again a fairly simple process. It will be important to contact the corporation about your decision and fill out the necessary documentation to transfer stock to a Trust, which is often an Assignment of Stock document. You will then submit this document to the corporation to have them file it. Afterwards, they will issue you new stock documents stating the Trust as the owner of the stock. Additionally, as with almost all business interest transfers, you will want to check with your corporation to determine if there are any additional terms or conditions in place when making Trust transfers.
A sole proprietorship is a business where you are the one and only owner of the business. Since you are the sole owner, a sole proprietorship is not considered its own entity as there is no separate corporation. In other words, legally there is no separation between you and your business. You are the only entity that the business has, which means that you cannot transfer your business interests to a Trust and leave it to someone. However, you can transfer the assets that make up your business to a Trust. The process to do this is like other basic assets, in that you will go through the process of filling out a legal document listing the assets, the owner, and who will be the Trustee that will acquire the assets upon your death.
When you are busy running a company, it might be difficult to carve out time during the day to contemplate business succession and estate planning. That is why Trust & Will wants to make the process easier for you so that you can have the added weight of this responsibility off your shoulders, once and for all. Check out our online website, to find the solutions you need to craft a Trust-Based Estate Planning and Will planning, to make sure that all of your affairs are in order long before you need to be concerned about them.