If you have worked hard to build a family business, it is only natural to want to protect and pass it down to the next generation. But figuring out the best way to pass wealth to your dependents is never a walk in the park, especially if the wealth in question is in the form of a business.
One of the best estate planning tools you can use to protect and bequeath your business to the people and causes that are dear to you is the trust. Here are three compelling reasons why you need to consider holding your business in a trust.
1. Asset protection
One of the greatest advantages of holding your business in a trust is that it makes it quite difficult to contest the decedent’s wishes. Of course, it can happen. However, contesting assets that are held in a trust is much more difficult that contesting a will. Do keep in mind that you cannot use a trust specifically to escape an existing liability. This would amount to an abuse of the system.
2. Succession planning
Your business is your legacy – but business goals and objectives can change over time, especially once someone new takes over. If you want to make sure that your business objectives are preserved for the future, a trust can help you do so.
3. Privacy safeguards
When you will your business to a family member or some other beneficiary, the will must go through probate, which is a public process. A trust, on the other hand, is private. If you cherish privacy, then you are better off placing your business under a trust.
If you own a business, it goes without saying that protecting what you have worked to build is a top priority. A trust is one of the most effective tools you can use to protect your business and ensure a smooth transition after you pass.