Creating an estate plan protects you and your family’s financial future. Using living trusts lets business owners transfer ownership of the business easily and without disruptions to your business.
An estate planning attorney can help you transfer your business or its value to your loved ones. You reduce your tax burden and maximize the total value of your estate for your beneficiaries.
Estate Planning Goals and Living Trusts
How a business should be transferred depends on your long-term goals and other factors.
You may choose to transfer a business before or after your time of death. Some business owners may want to liquidate their business assets instead of transferring an operating business to a beneficiary.
Working with an estate planning professional is the first step in mapping out the strategy that meets your needs.
A living trust lets you transfer the business into the ownership of the trust. You can designate yourself as the trustee so that you continue to manage business assets while you’re alive.
Transferring Your Business Assets
Transferring a business for estate planning requires you to understand how different assets are treated. Real estate property related to your business can be moved into a trust using a deed transfer.
Warranty and quitclaim deeds are typically used, and each has benefits and limitations that you need to consider. This is especially true if you want to give beneficiaries the ability to sell business assets in the future.
Your attorney can review your estate planning goals and circumstances to help you choose the right option and prepare the appropriate deed.
Accounts, stocks, and other financial assets related to your business may be transferred into a living trust. You need to notify financial institutions and complete the necessary paperwork.
Many will request a certificate of trust in order to complete the transfer. So you’ll need to gather all of the documents required to avoid any delays or issues.
IRAs, life insurance, and other accounts may need to be kept in your own name, as these cannot be placed under the ownership of a trust.
Creating Your Living Trust and Estate Plan
Business owners must take inventory of the assets related to their organizations when moving them into a living trust. This ensures that you include all related assets in order to maximize their value for beneficiaries.
Estate tax rules must be considered, as the value of business assets at the time of your death will determine the estate taxes what will be owed by your estate.
When the value of your assets is higher than the exemption limit, your estate and its beneficiaries may be responsible for meeting these and other obligations.
You can leverage your business structure to reduce your estate’s value and minimize its tax burden. A limited liability company (LLC) structure gives you the ability to transfer assets to children through trusts without losing control.
Living trusts are valuable tools that help you reduce your estate value. They protect assets from the costly and time-intensive probate process while minimizing any potential estate taxes that may need to be paid.
Your estate planning attorney can outline all of the strategies that are available to you in order to create the right plan for your long-term financial wellbeing.
More importantly, you provide greater value to your beneficiaries and establish a more secure financial future.