Your business is an essential part of your life and livelihood. You expect your company to provide for you and your loved ones now and into the future.
Creating trusts to protect your company is not exclusive to estate planning. While a trust can benefit your business after you pass away, there are also benefits to creating a trust to support your company now.
Here are some ways that a trust can support your business and its assets.
A layer of protection for business owners
There can be several threats to your company and its assets, such as collections efforts, lawsuits and other disputes between partners and family members. While you may initially only think about trusts from an estate planning perspective, a trust can also shield your business’s assets while you are alive.
You will need to assess the types of assets that need protection and what you want that protection to look like. Then, you should look at different types of trusts that could meet those needs, such as:
- Testamentary trust. This type of trust becomes active after you (the grantor) die and can be used to pass assets on to one or more trustees.
- Living trusts. A trust is created during your (the grantor’s) lifetime to transfer property to a trustee. You may make changes to the trust while you are alive, but after you pass away, the trust becomes irrevocable.
- Irrevocable trusts. As the name suggests, an irrevocable trust is one that cannot be easily changed once it goes into effect. However, there are limited circumstances where an irrevocable trust can be revoked.
Support against liabilities
In some cases, you know the potential problems before they become an issue. Still, in other cases, a problem can arise only after you realize it is too late to add protection. Including a trust to protect the company’s assets can give you and the trustee peace of mind that the trustee will receive the appropriate assets.
As you determine your potential liabilities, you will want to look at what type of trust will best suit the needs of your business.
