Restructuring a Business for Asset Protection
If you have a business, you know how hard you’ve worked to maintain it: all the late hours, countless phone calls, endless paperwork, and more. When you pass on, you’ll want to make sure that these assets you’ve worked so hard for are protected. Estate planning can help you do that.
Not only are regular assets (money, property, etc.) eligible for protection through estate planning, less conventional ones are as well. Bitcoin and other cryptocurrencies can be protected via a trust, ensuring that everything you want protected—even something outside the traditional asset realm—is kept safe and secure.
What is a Trust?
A trust is pretty simple to understand. It’s essentially a three-party fiduciary relationship. You have your trustor (you, in this case), who transfers assets to a trustee for the benefit of the third party, known as a beneficiary. This transfer grants the trustee nominal ownership over assets. These same principles of a three-party relationship apply to your business assets. The trust is treated, by the IRS, as an entity.
When you pass on, your trustee will confer your assets to the beneficiary. You may be thinking, “How is this better than a will?” Many people, when they think of estate planning, automatically jump to the last living will and testament as the golden document to have. But actually, a living trust is more advantageous.
Trust vs. Will
A trust goes into effect the moment you create it, whereas a will only becomes effective after you die. You can use a trust to start transferring your property prior to death; you cannot do that with a will, so you have a little less control. Also, a trust will get you out of probate court. If you die with just a will, you have to go through probate, which is a long, tiring process where a court distributes your assets for you. This can tie up your family for years while a court ensures the validity of the will.
Lastly, a trust can be kept private, whereas a will is on the public record. While a trust doesn’t include the ability to make funeral arrangements and name your children’s guardian if they’re minors, it does let you save on taxes and make disability arrangements.
Crypto: The New Wave
Everyone’s talking about Bitcoin these days, and everyone seems to have an opinion about it. If you’re a Bitcoin investor, or an investor in other cryptocurrencies such as Ethereum, Litecoin, Dash, and more, you’ve heard all the opinions, made up your mind, and, now, most likely just want to know how you can protect your coins via an estate plan.
As cryptocurrency jumps in popularity, more and more estate planners are encouraging clients to work their crypto into an estate plan. Cryptocurrency is, like your other assets, subject to distribution. Your crypto cannot be inherited, however, and, if you don’t include it in your estate plan, it will be as though it never existed. A trust is, as with your other assets, the best way to manage this property.
When deciding how to manage your cryptocurrency, make sure that your intended beneficiary is able to manage an entity like crypto, which is very volatile. You’ll also want to ensure that your directions are clear, including how to access your account to get the coins. This complicated, especially as cryptocurrency is relatively new, hence why an estate plan is best carried out under the guidance of a professional estate planner.
If you want to make sure that your business is protected after you pass on, a trust is the way to do it. Your assets will be protected, and you’ll be able to start the process before death, allowing you a measure of control and the ability to avoid probate.