There are a variety of legal instruments available to people to utilize when creating an estate plan. One important legal document is a last will and testament. However, in addition, many people also prefer to utilize a trust. In many ways, trusts allow more control over how assets are distributed. Many business owners in Massachusetts and other states prefer using trusts to transfer business assets to heirs.
Many business owners are worried about leaving their business to their intended heirs who may be too young or inexperienced to manage a business. A trust is an effective solution to this problem. The settlor, the person who creates the trust, can choose a trustee to be in charge of entrusted business assets until intended beneficiaries reach a specified age.
Some business owners want to maintain privacy when it comes to ownership of their businesses. However, when a court adjudicates a will it is recorded in the public record. This means anybody can look at the record and see who the beneficiaries of business assets are. On the other hand, with a trust this information is kept private; with the will simply stating that business assets are to be transferred to the designated trust.
When creating a trust to protect one’s assets, it is important in Massachusetts or in any other state to properly draft the legal document. If a party decides to challenge the validity of the trust, the legal language of the document will be scrutinized and could be deemed unenforceable by a judge. This could create serious legal problems for intended beneficiaries.
Source: business2community.com, “Estate Planning for Small Business Owners,” H. Lee Thompson, Aug. 12, 2013