Business Interests and Your Revocable Trust

If you own stock in a public corporation, your broker can help you re-title this stock into the name of your trust.  But if you have your own corporation, partnership or limited liability company, there is no outside manager to go to for this assistance. But you can and should be actively involved in making sure that this transfer takes place.

Step one is to assign, by written instrument, your interest in the entity from you (or you and your spouse) to you (or you and your spouse) as trustees of your trust. Step two is to obtain the written consent of the manager of the entity to the assignment. There may be some previously signed agreement by which you agreed to restrictions on your right to transfer your interest, and the consent  of co-owners is needed to waive these restrictions.

Step three is to make sure the book-keeper of the entity sends checks out in the future to you (or to you and your spouse) as trustees of your trust, rather than to you (or to you and your spouse) individually. Step four is to make sure the accountant of the entity lists your trust rather than you individually as the owner of your interest on the income tax return of the entity (and on form K-1 if one is being filed).

One of the purpose of your trust is to avoid probate, but to accomplish this result, the trust must be funded. The above steps represent the way in which your interest will become re-titled into the name of your trust so that the expense, delays and headaches of probate will be avoided.

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About randyspiro

I am a super lawyer in California with dual specialization in Estate Planning and Taxation.
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