You can protect your and your family’s financial future by creating a well-crafted and legally astute estate plan that is in sync with your current and long-term goals. Living trusts can be used by business owners for transferring ownership in an easy and streamlined manner.
This can be done smoothly and without any adverse consequences to the business. You should hire the services of a qualified estate planning attorney to maximize the total value of the estate and reduce your tax burden.
A Living Trust Can Meet Your Estate Planning Goals
Long-term goals and other factors play a vital role in how a business must be transferred in order to ensure its perpetuity. You can choose to transfer the business before or after your death.
Many business owners prefer liquidating the assets instead of transferring operational business assets to a beneficiary. The first step in mapping out the best strategy that will meet all your needs is to get a seasoned estate planning lawyer on your side.
Living trusts can help you transfer the business into ownership of the trust. You can either designate yourself as the trustee or use another entity. You can continue managing the assets if you designate yourself as the trustee.
Transferring Your Business to a Living Trust
You need to understand how different business assets are treated to transfer them for estate planning. You would require a deed transfer for moving real estate property related to business operations into a trust. You can use both quitclaim and warranty deeds. Both have their individual limitations and benefits that a skilled estate planning attorney will walk you through.
This is especially important to consider if you want to give your beneficiaries the ability to sell the business-held assets in the future. Your attorney can help you choose and prepare the appropriate deed by reviewing individual circumstances and estate planning goals. You can transfer accounts, financial assets, and stocks related to the business into a living trust.
Based on this, you would need to notify the financial institutions and complete all necessary paperwork. The majority will require a certificate of trust for completing the transfer. You can avoid delays by gathering all the necessary documents beforehand.
Life insurance, IRAs, and other accounts may not be transferable as they cannot be placed under the ownership of a trust.
Creating an Estate Plan Involving a Living Trust
Business owners are required to take inventory of assets related to their organizations when transferring them into a living trust. You should include all related assets for maximizing their value for beneficiaries. Estate tax rules should be considered as the taxes will be calculated at the time of your death.
The estate and all beneficiaries may be held responsible for meeting obligations when the value of assets within an estate is higher than the exemption limit. You can maximize the tax burden and reduce the estate’s value by leveraging the business structure.
You have the ability to transfer assets to beneficiaries through a trust without really losing control by using a limited liability company (LLC) structure. You can reduce your estate value by using living trusts as valuable tools. They protect business assets from time-intensive and expensive probate processes while limiting the amount of estate taxes that need to be paid.
All available strategies will be outlined by your estate planning attorney to ensure you choose the right plan of action for your long-term financial well-being. Further, living trusts provide greater value to beneficiaries and help in establishing a more secure financial future.
Changing Ownership of a Business Through Trust
You are essentially changing the legal ownership of your business assets when you transfer them to a living trust. Most people appoint themselves as trustee when creating a living trust.
This will give you essential control over the assets while allowing them to be technically owned under the trust. You should note that all items held within the trust will be assigned to your social security number if you take this route.
You can run the business as normal by appointing yourself as the trustee of the trust. You should also name a successor trustee for the smooth transition of the business.
The trust agreement should contain terms and provisions that are scrupulously drafted. This is especially important for the terms related to the operations of the business and the manner in which ownership decisions need to be taken if the owner dies or otherwise becomes incapacitated.
Other specific tax-oriented provisions may be required if the business is taxed as an S-corporation. You will be able to slowly implement your estate plan through early planning. This will help in ensuring that the main source of your family income remains protected.
Speak to a Reputable Estate Planning Attorney Today
For business owners and entrepreneurs, it can be difficult to carve out the time required for contemplating estate planning and business succession. But when you hire the services of a skilled estate planning law firm, you can accomplish your goals with minimum time involvement or hassle.
The Southern California estate planning attorneys at Garmo & Garmo, LLP can help you make the right decisions to ensure your business interests remain protected. Schedule your complimentary consultation with our lawyers today. Call us at 619-441-2500 or contact us online.