When you\u2019re doing your Estate Planning, don\u2019t forget about your business interests. Businesses are one of the most common things that we see that are left out of the Trust, even though an Estate Plan has been done.\u00a0 Whether you have an LLC, a corporation or a partnership, your ownership interest in that business is an asset that will have to go through the probate process when you die, if the interest is not held by a trust.\u00a0 And the business interest can end up being one of the most complicated aspects of the probate that can run up the costs of the probate and add to the time to administer the estate.\u00a0 So missing this key component of your planning can be costly to your family in terms of time and expense.<\/p>\n
If you have an LLC, make sure that your membership interest is assigned to and held by your trust. If it is a corporation, you need to transfer the stock to the trust and have a new stock certificate issued in the name of the trust. You will also need to have the change of ownership recorded on the corporation\u2019s stock ledger.\u00a0 If it is a partnership, your partnership interest will need to be assigned to the trust.\u00a0 Note also that, if the company has restrictions on the right of transfer of the ownership interest in the company, you may also have to get a corporate, LLC or partnership resolution to allow the transfer.<\/p>\n
On the asset protection planning side, you should seriously consider having a separate Nevada Asset Protection Trust to hold only your interest in the business.\u00a0 Separating your business ownership interest into a separate Nevada Asset Protection Trust will serve to avoid exposing your entire personal asset portfolio (e.g., your home, personal savings, stock investment portfolios, etc.) to a business liability (in the event that the business is drug into a lawsuit and a successful corporate veil piercing occurs).\u00a0 Doing this will also serve to shield and protect your income flow from the business, even if you end up being sued personally in an unrelated matter (e.g., a car accident) and a personal judgment results. With regards to protecting your personal asset portfolio, it is always best to have your personal assets held in a separate asset protection trust that is not a part of the business.\u00a0 (Note that there is no legal limit on the number of trusts that a person can have. Sometimes, for asset protection and\/or estate planning purposes, a person will have multiple trusts that serve specific purposes in their overall estate and asset protection plan).<\/p>\n
As for a business that has partners (I\u2019m using the term partner here loosely to refer to what may be an actual partnership or an LLC or corporate ownership interest), the partners should also take care in advance to deal with succession of the business interest if a partner\/member\/shareholder dies.\u00a0 It is wise for the partners to have a Buy-Sell Agreement that allows the business or the other partners to purchase the deceased partner\u2019s interest on predefined terms when a partner passes away. The Buy-Sell Agreement can set the valuation or agreed method of valuation of the business and how funding of the deceased partner\u2019s interest will be provided (funding is often provided for with a life insurance policy).\u00a0 If the partner has transferred the interest into a trust, the trust will be the partner\/shareholder\/member that is being bought out.\u00a0 If a partner has not put his\/her ownership interest into a trust prior to death, the buyout will be a payment to the deceased\u2019s partner’s probate estate (a buy-sell agreement itself, will not avoid probate of the deceased partner\u2019s interest).<\/p>\n
Planning in advance to adequately address all of the business ownership interests can save you and your family a significant amount of time, money and nuisance. Don\u2019t procrastinate on this vital issue.<\/p>\n","protected":false},"excerpt":{"rendered":"
When you\u2019re doing your Estate Planning, don\u2019t forget about your business interests. Businesses are one of the most common things that we see that are left out of the Trust, even though an Estate Plan has been done.\u00a0 Whether you have an LLC, a corporation or a partnership, your ownership interest in that business is […]<\/p>\n","protected":false},"author":1,"featured_media":4416,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45,8],"tags":[12,46,47,14,48,21,49,13],"class_list":["post-1636","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-law","category-estate-planning","tag-asset-protection","tag-business-succession-planning","tag-corporation","tag-estate-planning","tag-llc","tag-nevada-asset-protection-trust","tag-partnership","tag-trust"],"_links":{"self":[{"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/posts\/1636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/comments?post=1636"}],"version-history":[{"count":1,"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/posts\/1636\/revisions"}],"predecessor-version":[{"id":4229,"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/posts\/1636\/revisions\/4229"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/media\/4416"}],"wp:attachment":[{"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/media?parent=1636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/categories?post=1636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sagedigital.io\/rdj\/wp-json\/wp\/v2\/tags?post=1636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}