Can a Revocable Trust Run a Business?
- When you set up a revocable living trust, you can appoint anyone as a trustee --- including yourself. If you retire at any time, you can appoint someone else as the trustee of the revocable trust to run the business for you. You don't have to change anything about the way you conduct business; the only difference is that the revocable living trust protects your assets from probate.
- To properly use a revocable trust to run a business, you have to first turn your business into a corporation or limited liability company (LLC). Arrange for the title of the share certificates or membership certificates of the business to be named after the revocable living trust. This transfers business ownership from you to the revocable living trust. Appointing yourself as the trustee of the revocable trust gives you full control over the business.
- You can name another person to become the trustee of the revocable trust to run the business after your death. That person then owns all the stock in the business and completely controls the business immediately after your death. The new trustee does not have to wait for the probate process to finish to take over the business and continue normal operations.
- You can arrange for the assets of the business to go to an individual other than the trustee at your death. For example, a businessman leaves the running of the business to his children, but leaves any dividends or other distributions of funds from the business to his spouse. If the new trustee does not want to run the business and sells it instead, the trust can arrange for the sale proceeds to go to the owner's spouse.