If you own a successful business and do not yet have a living trust set up, you could be putting your estate at risk. When you die, the government will come calling and Uncle Sam could end up taking a significant chunk out of your family's inheritance if you did not talk to a lawyer before you passed. Here are three reasons why every business owner should set up a living trust.
Reduce Estate Tax
The first thing the government will do upon your death is look at your estate in its entirety and decide if taxes are owed. If you do not shield any of your assets in a living trust, your family could end up losing more money to the government than is necessary. A good business lawyer will help you set up a living trust and will in a way that will minimize the amount of money your family will lose to the government once you're gone.
Your Business Could Be Used to Pay Off a Personal Debt
If you die with creditors, those creditors might be interested in collecting what they are owed from your estate through probate. One of the key benefits of a living trust is that it can protect your business from your personal debts. Without a living trust, your business could be essentially raided or sold off in order to settle your personal finances. But a good attorney can set up your business through a trust in a way that will shield it from people looking for a handout after you die.
Name Your Successor
If your family is involved in your business, a living trust can be helpful when it comes time for a transfer of power. Whether you die or are incapacitated, the living trust will make clear which members of your family you prefer to take over the business. This will allow you to name your successor and can also nip any family disputes in the bud because you have made your wishes clear in writing.
If you have been successful in business during your life, make sure you do what you can to protect that success after your death. Setting up a living trust can help you shield your business from the government or creditors when they come calling for their piece of the pie after you are gone. Contact a business attorney firm, like Rudolph and Chonoles LLP, for more information on setting up a living trust.