01 Jul Does My Business Belong in a Trust?
Trusts can be used to your advantage for personal and business reasons to accomplish your goals of reducing or eliminating your estate taxes. Other benefits of trusts include: asset protection, probate avoidance, and safeguarding from creditors or lawsuits.
Many types of trusts exist, and they each have different pros and cons beyond the clear benefits. For example, some are a perfect fit for liquid assets and others are more suitable for a business. The easiest way to figure out what type of trust(s) is appropriate for your situation is to consult an estate planning expert at Phelps LaClair.
Using Trusts as a Business Advantage
Does my business belong in a trust?
Typically, when we think of placing assets in a trust, we think of bank accounts, CDs, bonds, investment accounts, commercial or real estate property, and money markets. However, there are estates that don’t have traditional assets like these.
Small business owners may have a large amount of wealth tied up in one place: their company. If this is the case for your estate, you are probably wondering how you can best pass on your legacy to your children and grandchildren.
For you to confidently answer, “Does my business belong in a trust,” you may need to explore types of trusts before automatically saying, “Yes.”
Some types of trusts that work for businesses include:
This trust allows a business owner, as the grantor, to manage their business details and finances while also providing for beneficiaries.
This trust is required to allot all profits to the parent entity—assets are not funneled off to savings or allowed to be given away as charitable donations.
This type of trust allows for funds to be donated to charities and allows for partial or total principal transfer to beneficiaries. However, complex trusts are required to maintain an income.
Building an Estate Plan for Business Owners in Arizona
Estate planning is a process that involves many complex details, and when you add business into the mix you’re facing even more complications. In the past we’ve outlined three great tips for business owners, but the best tip we can provide is to get a respected attorney on your side—particularly an expert in estate planning. This can make a world of difference in the long run.
Without consulting an expert, it’s difficult to tell which estate planning tools are right for you. At Phelps LaClair, we make estate planning our mission. We don’t handle litigation, divorce, or bankruptcy. This allows us to keep our focus on creating and maintaining the best estate plans possible for our Arizona families.
At Phelps LaClair, we can help you use trusts as a business advantage. The foundation of our firm is one of teamwork, family, and legacy. We value you and your business. Our dedicated Phoenix team is happy to help you develop an estate plan for your business to ensure your assets are secure. Pop into our education center and learn more about trusts and estate planning.
photo by Lars Plougmann | from Unbounce.com on 7/1/2021 | used under the Creative Commons license | no changes made