Can my minor child inherit my business?
24 Sep Can My Minor Child Inherit My Business?
Posted at 14:43h
In Business Owners
If, as a business owner, you have built something successful from scratch, you should be proud. You want to ensure that it is well taken care of and in the best possible hands if one day you are unable to manage it.
Many parents will their business on to their adult children. If your child is under 18, you may wonder, “Can a child inherit a company?” How can I pass my business on to my son or my daughter?
A minor child cannot inherit your business directly, but there are other ways to do it. We’ve provided a scenario to help you understand. Let’s look at Maggie’s case.
Passing Your Business on to Your Child
Maggie is an entrepreneur who built a successful robotics company. She experienced rapid growth and success. Maggie is not in good health. She wants to ensure that her daughter Lily, 12, will inherit her business if she passes away. Maggie was unsure of what steps to take and sought out an attorney who could handle the finer details of estate plans with LLCs. Maggie learned that a minor child cannot inherit a company directly. Maggie and her lawyer crafted a plan to ensure that her daughter would be the owner of her business when she reached 18. There are many ways you can
leave a legacy for your children. Maggie’s first three steps were: Setup a trust. Choose a trustee. Fund
trust. Funding a Trust with an LLC in ArizonaFirst, with the help of her estate planning lawyer, Maggie set up a trust specifically for Lily. Because of her situation, with assets that were growing quickly, Maggie chose an irrevocable trust so she could leave everything to her daughter without paying estate taxes.
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- Next, Maggie named her trusted business partner, Dave, as the
- trustee
- . Dave will oversee the operations until Lily reaches 18 years old if Maggie passes away. Maggie then completed a transfer document to fund
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the trust
. This document
assigned the LLC’s ownership interests to the trust. She updated the LLC records to reflect that the trust was now the owner. This way, even if her daughter doesn’t inherit the business directly, she will inherit the assets that the trust owns. The trust is now the legal owner for Maggie’s LLC. Maggie notified her bank and business partners of the ownership change. Maggie can be assured that, with the trust documents in place and her business in good hands, until ownership is transferred to her daughter, her business will be in good hands. Maggie’s peace of mind was enhanced by working with an experienced lawyer. She can relax knowing that her legacy and wishes will be respected. Estate Planning Attorneys in Glendale, Arizona
Managing a financial asset like a business is a large responsibility. It’s easy to see why it is wise to involve a professional estate planner in the process of transferring your business to your child. We’re with you at Phelps LaCLair every step of your journey. We want to make estate-planning easy for you. We will help you achieve your goals, and ensure that you are covered. We can help you choose the right tools to meet your needs. If you’d like to discuss your estate planning options, set up a free consultation today.
Image by
StartupStockPhotos
from Pixabay on 9.12.2024 used under the creative commons
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