How To Transfer Your Business Into A Revocable Trust

Owning a business is about more than just earning a living. It is about pouring your blood, sweat, and tears into a successful company. You want to protect it now, and in the future. Perhaps you have had the foresight to draft an estate plan but you have overlooked an important step during the planning stage. You did not establish a trust and transfer your business interests into it. If you forget this step, it could significantly hurt the business you have worked so hard to build. Below, our Daytona Beach trusts lawyer explains how to do it.

What Happens if You Do Not Transfer Your Business Into a Trust?

Perhaps you are a member of a limited liability company (LLC) or you own shares in a major corporation. If you do not establish a trust and transfer your business interests into it, it can have many potential consequences for your loved ones, and possibly even your business. If your business interests are not placed into a trust, they are subject to the probate process.

During probate, the court must appoint a personal representative to administer your estate. If you have drafted a will, the court will prove it and confirm the personal representative you have named. The probate process will then administer your estate and distribute your assets, including your business interests, to your beneficiaries or heirs.

Probate, however, can be a lengthy process. Until your estate is settled and probate is closed, nothing can be done with your business interests. Your customers may lose confidence, employees may leave to find other employment opportunities, and the value of the business may fall. All of these risks can be avoided by simply establishing a trust and transferring your business into it.

Steps Involved when Transferring Your Business Into a Trust

You can transfer your business interests into a trust in just a few simple steps. These are as follows:

Identify your business interests: If you own a sole proprietorship, determining the share of the business you own is much more straightforward. However, if you are a member of an LLC or you are a shareholder in a corporation, it can become more difficult.
Review governing documents: If you have a partnership or shareholder agreement, it is important to review this paperwork to determine if there are limitations on transferring your interests into a trust.
Establish or update a trust: Trusts are legal documents that are separate legal entities from your estate. If you already have a trust when you become a business owner, it is important to update it to include the company. If you have not established a trust, it is important to create one. In either case, you will have to execute an Assignment of Interest or Stock Assignment to change ownership from you to the trust.
Work with an attorney: An attorney can provide valuable advice when transferring a business into a trust. For example, if the business is a professional service entity, such as a medical practice or law firm, it cannot be directly titled to a trust. In these cases, you may have to draft a Nomination Agreement to ensure the trust takes over ownership in the event of death or incapacity.

Call Our Trusts Lawyer in Daytona Beach Today

Transferring your business interests into a trust is important but it is also not straightforward. At Bundza & Rodriguez, our Daytona Beach trusts lawyer can advise on the facts of your case and ensure that you and your business interests are protected. Call us today at 386-252-5170 or contact us online to schedule a consultation and to get the help you need.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/0736.html