If you have a business such as a corporation, LLC, sole proprietorship, etc., you have to ask yourself whether or not you want to assign your interest in that business to your trust. The fundamental questions are: "Is this business part of my trust estate or not? Will it be subject to the rules of the trust? Will my trustee be in charge of this business?" If the answers are "Yes," then you need to assign your business interest to the living trust. By doing so, you make it clear your business is indeed part of your living trust.
I once had a client who owned a business with his partner. There were no decent legal documents but they had a "handshake deal." They owned a piece of land in Los Angeles. A junk yard company used the land and leased the property from my client and his partner. The monthly rent for the property was $8000. My client and his partner took $4000 each as rental income. I asked my client, "What happens when you die? Who gets that $4000 a month?" He said, "Well, I want my family to continue getting the $4000/month." I explained that if he assigns his business to the trust, then the trust can continue receiving the income after he dies. We also got his business partner to sign the assignment so there is less chance of any challenge to the plan. Before implementing this change, the future of his business holding was very uncertain.
If you own a business, consider assigning your interest in the business to your living trust. The more "clear" your legal documents are, the less likely there will be confusion or misunderstandings in the future.
If you want to learn more, call my office at (661) 414-7100.
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