Have you given thought to what would happen to your business if
something happened to you?
Would it continue on, or would it be sold by your heirs?
Linking your business to your Revocable Living Trust will allow
the flexibility of choosing what you want to happen with your
company.
As a business owner, your stock or membership interest is subject
to probate if it is held in your name personally.
The probate process takes anywhere from a required minimum of 4
months up to 2 years. I have even seen probate drawn out to a
lengthy 16 years due to arguments.
Would your business be worth anything after going through that?
If your business is like most, it would be better to sell or
transfer the company immediately so as not to lose clients or
contracts.
It’s easy to accomplish this with a revocable living trust. When
you establish a living trust, set it up to own your business
stock or company membership interest (rather than you owning it
personally).
This is the first step to keeping your business out of the
probate process. Here are the main advantages to linking your
business to your trust:
• Avoid Probate
• Avoid arguments (Last Will & Testament contests)
• Transfer your interest to your heirs quickly
• Continue with Business as usual or sell business with no probate court intervention
Four Steps to Safeguard Your Business Remember these basic steps
to ensure your business is linked to your trust:
1. Prepare Certificates—Issue your membership interest or stock
in the name of your trust, with you as trustee. For example: The
Celebrity Trust, John Doe, Trustee. Cancel the original
certificates previously owned by you and replace them with the
new certificates.
2. Update Ledgers—For an LLC, the schedule of membership interest
should reflect that your interest is held by you as trustee of
your trust. For a corporation, the corporate stock transfer
ledger would show your shares are held by you as trustee.
3. Update Trust Schedule – List your membership interest or stock
certificate shares on your trust schedule under the headings of
Corporations or Limited Liability Companies. If your schedule
doesn’t have one of these subheads, then add it. Place your trust
schedule behind the trust agreement itself.
4. Prepare Company Resolutions – Record your resolution of this
transfer to trust in your company records, with the correct
resolution document and place it in your Minute Book. It is
important to take ALL the appropriate steps to correctly link
your business to your trust, so consult your attorney or minutes
professional about getting it done right.
Need to link your Living Trust with your company? We'll do it for
you. Call us at 480-344-1870. http://www.JustAMinuteLLC.com
