Many individuals establishing trusts often wonder about the benefits of moving their business interests into these trusts. Here's why they consider it: 

• Bypassing Probate: Business interests, like other assets, when exceeding the stipulated California probate threshold, can lead to a time-consuming, costly, and public probate process. Trust-based assets sidestep this probate procedure.
• Planning for Incapacitation: Trusts provide a mechanism to ensure your business remains operational posthumously and during unexpected incapacitation from sickness or accidents. With business interests in a trust, a designated successor trustee can seamlessly assume your responsibilities, ensuring continuity.

Things to Remember Before Making Transfers

Before relocating your business interests to a trust, it's imperative to collaborate with your advisor, attorney, or estate planning professional. Given the diverse types of business interests, they can guide in avoiding potential violations related to corporation bylaws, LLC agreements, or shareholder contracts.

Advisors can craft a trust that gives the trustee definitive powers to steer your business. As every business type is unique, partnering with legal professionals can prevent possible pitfalls.

Process of Transferring Business Interests into a Trust

The methods for moving your business assets into a trust vary, primarily based on the nature of the business interest and its foundational structure. Below are procedures for a few standard business types:

• Sole Proprietorship: As the sole owner in this model, transferring your business interests into your trust is straightforward. Through an 'Assignment of Interest' agreement, you directly assign your business holdings and assets into the trust.
•  Corporations: If you're a stakeholder in a corporation, connect with the corporate entity to obtain the necessary paperwork for transitioning your shares into a trust. This paperwork is frequently termed "Assignment of Stock." Once submitted and recorded, the corporation typically releases new stock certificates with the trust as the designated owner. It's wise to confirm any other prerequisites or stipulations with the corporation.
•  LLC or Partnerships: The procedures might be more intricate for those involved in Limited Liability Companies (LLC) or various partnerships. It's crucial to first understand the stipulations in your LLC or partnership contract concerning the transfer process. If other stakeholders exist, they might need to endorse the move. Collaborate with your attorney to determine the optimal pathway, which will hinge on the initial business agreement. Executing an "Assignment of Interest" and updating partners might suffice for LLCs, whereas partnerships may necessitate adjusting ownership documents.

When it comes to navigating the complexities of moving business interests into a trust, it's invaluable to consult an experienced estate planning lawyer for strategic counsel. Our law firm is always at your service to address any queries about this process.