If you have worked hard to build a business, it is only natural to want to protect it. This is especially true if you want to pass your business down to the next generation upon your death. While setting up a limited liability company (LLC) or incorporating your business can offer some sort of personal protection, they may not protect your business assets. This is where a trust comes in.
You can protect your business by putting it under a trust. Depending on your preferences, you can set up either a revocable or irrevocable trust. Here are two reasons why you should consider putting your business under a trust.
It reduces taxes
Placing a business under an irrevocable trust basically means that it will cease to be part of your taxable estate during probate. However, there is a catch. Assets that are transferred to an irrevocable trust are subjected to gift tax. And this means that whereas your business will not be subject to estate tax, it will still be pursued for gift tax.
It allows you to create a succession plan
A trust allows you to create a succession plan. And a succession plan, on the other hand, creates a clear chain of command, which is crucial for the smooth operation of the business in your absence. If you are looking to safeguard your legacy, then you need to seriously consider placing your business in a trust.
No matter the size or nature of your business, it is prudent that you plan for the future. Placing your business under a trust can give you peace of mind knowing that your legacy and family will be protected.