You didn’t build your business overnight. How can you make sure it succeeds if something unexpected were to happen to you? Use a trust to designate who would make financial decisions for the business after you’re gone. You can also set up a trust to create a succession plan, so your business can keep running without having to go through probate. This can be especially important if you’re not sure how other family members will react to change or if you have a business partner you don’t see eye-to-eye with all the time anymore. Think ahead and discuss the matter openly with your potential successors to ensure that they are ready and willing to accept the role.
Other times for trusts
Even if you don’t fall into one of the categories above, you may still choose to use a trust to protect and share your assets. A revocable living trust, for example, may help keep your assets safe from creditors in the event of bankruptcy or another financial issue. You may also find tax benefits to trusts, depending on your situation. With a generation-skipping trust, for example, you may be able to give assets to grandchildren tax-free. And if you’re worried about privacy, it’s good to know that your heirs can typically settle a trust privately. In contrast, a will typically becomes part of the public record when it’s settled through a court process called probate—and your loved ones may have to meet with a judge.
3 easy steps to create a trust
- Talk to a lawyer with experience creating trusts—typically an estate planning attorney—about your personal situation. Explain what’s most important to you and what your concerns are. They can help you understand the best solutions and choose a trust that will work for your particular needs.
- Make sure you find the right trustee—and don’t be afraid to name co-trustees. The trustee manages the distribution of assets from the trust according to your wishes. It could be a family member, a trusted friend,a financial professional—or a loved one and a pro working as a team.
- Start moving assets into the trust when your attorney recommends doing so. An empty trust won’t help you, so be sure to retitle assets to reflect that the trust now owns them.
Creating a trust may take longer than drafting a will, and it may be a little more expensive at the start. But when it comes to having the confidence that your wishes will be fulfilled and that your loved ones will be taken care of the way you want, it’s worth taking the extra time to make sure you get it right.