A properly organized and operated business offers levels of legal protection for its owners. This is a great benefit but these protections are limited in scope and area. A corporation or an LLC can provide the owner a liability shield from the company’s actions and debts. It does this while it remains an asset on the individual’s personal balance sheet. A trust may also serve to remove the business asset from the complications of probate. This can insure the viability of the business regardless of family interests and other assets of the deceased. Let’s take a quick look at putting a business into a trust.
What Is A Trust Under Oklahoma Law?
A trust holds the legal ownership of whatever property is held in the trust. This means that a business owner can put their business into a trust to be managed by a trustee. The purpose of the trust is to separate ownership into two parts: (1) the legal owner (trustee) who oversees managing the property or business that is in the trust, and (2) the beneficiary (equitable owner) who receives the benefit of the assets.
The trustee is typically the business owner or a separate person depending on the type of business and its goals. Specifically, if the owner is a trustee, the beneficiaries typically include other people or the business owner him or herself. .
Putting Your Business Into A Trust
Creating a trust is a legal process. It requires following certain specific actions and procedures to establish and run the trust properly. There are some costs and concerns in creating and operating a trust, just like there are with creating and operating a business. The ownership and management of the company held in trust may change, depending on the legal form of the trust and the rules it is set up under.
Over all a trust is great to use for the purpose of asset protection. It acts as another level of protection in addition to your LLC or corporation. A trust in Oklahoma can hold one or many different businesses. This may allow a business owner to separate the assets of one business in the trust from other businesses they own. A good example is a property owner that owns and rents out several different rental properties. Its not unusual to hold each property in a separate LLC owned by the business owners Trust.
The Legal Standing Of Your Trust
The way your trust is structured is based on your purpose in setting up the trust. Trusts are either:
Irrevocable – The trustmaker generally cannot terminate the trust. An irrevocable trust is more secure against creditors or other risks to assets.
Revocable – The trustmaker can end the trust at any time and take back ownership of the property in the trust. A revocable trust is more likely to be seen as part of the trustmaker’s property and will usually be considered assets in debt matters.
Trust As Sole Owner Of An LLC
For the trust to be effective in protecting you, it must be separate from you in management and operation. This means that you should not co-mingle assets of the trust or LLC with your own. Its important that the LLC or trust assets are separate because if they are not a creditor might be able to pierce the vail and claim that the trust or the LLC is simply a alter ego of the owner.
Tulsa Business Lawyers
In my opinion the most important stage in your business is its beginning. This is when you have a chance to protect your business and your assets. Its that time that all things pertaining to its structure and function come together to guide what happens going forward. This doesn’t simply include sales and product development but the very foundation on which its all built. If you need a free consultation with a business law and trust attorney in Tulsa give us a call at (918) 743-2233 or contacting us online.