Trusts provide a foundation for effective long-term ownership

A trust can offer substantial long-term tax advantages, protection for family members against potential creditors and, when family members aren’t prepared to take over, the possibility of professional fiduciary oversight of a critical family asset. For a business owner seeking family ownership and continuity for multiple generations, transferring stock in trust may offer better odds for a smooth succession than transferring stock outright, yet all trusts are not created equal. Focusing on four key steps can significantly improve the odds that the family business will stay in the family:

1. Transfer stock to an irrevocable trust during the controlling owner’s lifetime.
2. Include family-business-friendly provisions — and exit provisions — in the trust instrument.
3. Choose the governing law of the trust carefully.
4. Select a capable and properly empowered trustee.