As a Texas business owner, you know how important it is to protect your business. When determining the best way to go about this, you may want to consider placing your business assets in a trust.
Benefits of a trust
Placing your business assets into a trust can both protect your business assets from creditors and the death tax, if you are worried your family may have to pay that after your death.
Consider the structure of your business
No matter when you set up a trust, you should determine which type of trust is best for your business before setting it up. This could depend on how your business is structured. An experienced business attorney can advise you on your options.
Life insurance trust
If your business has a high value and is likely to be subject to the estate tax, but you would like to leave it to a family member, a life insurance trust might be a good choice.
A life insurance trust works by taking out a life insurance policy and placing the policy into a life insurance trust.
Upon your death, the life insurance trust pays the estate taxes and provides your successor with the amount of the value of the business.
Grantor retained annuity trust
A grantor retained annuity trust can be set up for businesses structured as S corporations. Your business assets transfer to the trust when you die and pay out an annuity to a beneficiary.
This type of trust is irrevocable, so you should make sure it is right for your business before choosing it.
A living trust is also an available option for your business. This is a good option if you are concerned about keeping your business running if something happens to you.
You are the trustee of your living trust, with one or two others designated as trustees if something happens to you. A living trust not only has tax benefits, but any assets in the trust cannot be used to satisfy business debts.
Having your assets in a trust can be a viable and practical option for protecting your business assets after your death. Exploring your options can be a good idea.