How Can Your Family Business Use Trusts to Benefit the Next Generation?

Posted by Debby EhrlichDec 09, 20210 Comments

There are a number of things we can do to make the future a better place for our children and grandchildren. We can recycle. We can buy electric cars. We can shop locally. Can we move the family business into a trust? (Yes, we can!)

Of course, there will always be distant worries we hope our kids won't have to deal with eventually, but one of the best ways to protect your successors is by utilizing the financial and legal tools available to you right now.

Numerous Trust-Types and Their Benefits

Some mistakenly believe a trust is a one-size-fits-all legal tool best suited for the ultra-wealthy. You've almost certainly heard of “trust fund babies,” but you may not realize how a trust could benefit your own children.

There are many different trust types, including:

  • Life Insurance Trusts
  • Grantor Retained Annuity Trusts
  • Charitable Lead Trusts
  • Charitable Remainder Trusts

There are important considerations when creating a trust, like whether it should be revocable or irrevocable, but ultimately, your family business is likely to benefit from one of these trust types. They each accomplish your ultimate goals differently, and what works best for you will be best determined through consultation with an attorney.

When the family business assets are held in trust, they are protected from subsequent personal lawsuits or debts. Another key benefit of the trust vehicle is that assets held by the trust don't have to go through California probate, which can be a messy and expensive process. Also, don't forget: When business assets are held in trust for the benefit of your children, your kids will be able to refer to themselves as trust fund babies.

Call a San Diego Estate Planning Attorney

All too often, people fail to realize just how unique each trust type is. No two family businesses are the same, and if you want to use a trust to protect your family business for future generations, then you'll want a uniquely tailored trust vehicle that accomplishes your goals now and in the future.

Maintaining a trust is similar to maintaining the family business in that sometimes life throws you a curveball, and you need to adjust course. It's important to work with an experienced California trust and estate planning attorney to set up and maintain your trust. Otherwise, you could end up wasting time and money on a trust that doesn't even accomplish your ultimate goals.