Trusts as Owners
To many people, saying a trust “owns” part of a business doesn’t make sense. After all, don’t the family members own their business? Isn’t a trust just some fancy legal structure their lawyer set up?
Here's a quick review of trust law to help.
In any trust, there are three types of people. There’s the grantor, who sets up the trust. There’s the trustee, who holds the trust assets. And there are the beneficiaries, the people for whose benefit the assets are in the trust.
Why set up a trust in the first place?
There are many reasons to set up a trust - control what's yours, give yourself flexibility in handling what you own, provide for orderly disposition of your property to your beneficiaries, protect yourself and your beneficiaries from outsiders, and give more money to your family and pay less in estate taxes
There are two types of trusts – revocable and irrevocable.
Revocable trusts can be changed without much trouble. Irrevocable trusts also can be changed sometimes, but only indirectly. If you put part of your business in an irrevocable trust, the trustee becomes the legal owner of what you put in. This is not a bad thing. It just means in the eyes of the law, the trustee has a seat at the decision-making table. You’re at the table. So is your trustee.
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