When you have a small business, one of the things you should think about is obtaining a trust for your business. A trust is helpful because it will help your business continue its normal functions even if you are not there to run it yourself.
Trusts have other benefits, too, such as helping you with tax reductions and assisting with charitable giving. So, for the benefit of your business, having a trust is a great choice.
Choosing a business trust
Business trusts are similar to family or individual trusts, but there are some differences. Business trusts, for example, can have multiple beneficiaries. Multiple trusts may take ownership of a business rather than just one, too.
A business trust is going to vary from state to state, which is something you have to keep in mind based on where your business is based. For example, if your business is in Ohio, you may need to build a trust based on Ohio law rather than in Colorado or North Carolina where you might have a franchise or second location.
Your trust is a legal agreement to keep in mind
Trusts are legal agreements that you need to protect your business. The trust will go over details about how to pass on the business or the length of time before the trust is dissolved. A fiduciary will be hired to maintain the trust and act in the best interests of your business, just like if you had a trust for your own personal assets.
There are several kinds of business trusts you may want to learn more about, including:
- A grantor trust, which has a grantor, trustee and beneficiary.
- A simple trust, which has to be verified by the Internal Revenue Service and that pays out to beneficiaries.
- Complex trusts, which may have distributions and a form of income.
There are many kinds of trusts to consider. If you think that a trust may be right for your business, then you should look into the different kinds of legal trusts and discuss which one may offer the most protections for you, your beneficiaries and your business.