Business owners in West Palm Beach may want to consider trusts for smooth succession and estate planning benefits. A well designed trust can offer tax breaks for beneficiaries and provide the grantor with a measure of certainty as to future ownership and management of a family-owned business.
Certain types of trusts allow the grantor to retain management authority and income entitlement while passing to beneficiaries the legal property interest in business assets. An effective trust instrument can reduce the impact on the grantor's gift tax exemption while lessening beneficiaries' tax burden.
A business succession trust can at once be advantageous to a group of beneficiaries while also placing limits on their ability to influence the future operations of the company. The trust instrument can designate a particular successor to control a business. Such a trust can also limit the voting and management rights of other beneficiaries.
Other advantages to a business trust include protections against creditors and the fractionation of interests in the event of divorce or business dissolution.
In order to achieve the grantor's goals, a business succession plan needs to evolve over time as the company grows and family relations change. Business owners should start planning as early as possible to establish a stable platform on which the ultimate succession plan is built.
With at least the foundation of a succession plan in place, Florida residents can take some comfort in knowing that the fruits of their labors will not end up being distributed in an undesirable fashion.
In combination with structured entities, such as family limited partnerships or limited liability companies, trusts can serve as highly effective tools for preserving business assets and providing for family members and loved ones. Florida business owners would do well to consider options for guiding business succession as an essential component of their estate plans.
Souce: North Bay Business Journal, "Trusts enhance options in business succession plan," Eric Gneckow, April 16, 2012