If you own or operate a limited liability company (LLC), protecting what you have worked hard to build should be your top priority. And one of the most effective vehicles for protecting and transferring assets is a trust.
A properly planned trust can help keep your business off the hands of the government and creditors, reduce risks and incorporate your investment into the broader estate planning goals. By placing your business under a trust, you can combine these two legal entities and benefit from the best of both worlds.
Benefits of placing your LLC in a trust
Your LLC interests are generally treated as personal property and, thus, eligible for probate upon your demise. As such, you want to be sure that you safeguard these interests and have a plan for what you want to happen to them when you pass on or if you are no longer capable of managing your affairs.
Here are two reasons why you should consider placing your LLC interests under a trust:
Avoid probate
Any asset placed under a trust generally avoids probate, which is time-consuming and can cost thousands of dollars depending on the size of the estate.
Plan for incapacity
You may have a plan for what you want to happen to your business interests when you pass on, such as getting a trusted family member to assume its management or having your partners buy out your stake.
But what happens if an illness renders you incapable of running the business? If you hold your business interests in a trust, you can include a clause in the trust instrument that automatically authorizes another person to assume the affairs of the business if you are incapacitated.
Getting started
Your business is probably one of the most important assets you can ever own. Find out how to safeguard your rights and interests by placing your LLC interests in a trust.