I wanted to reach out to you regarding part of the asset alignment of your estate plan. Specifically, I wanted to address any necessary steps you may need (with our help if you’d like) to take to ensure that any business interests you may own are integrated into your estate plan.

Partnership Interests
Each partnership has its own rules. If you are a partner in a limited partnership, limited liability partnership or a general partnership, you will need to review your Partnership Agreement to determine whether there are any restrictions regarding transferring your partnership interest into your revocable living trust. It may be necessary to obtain the approval of some or all of the partners in the partnership before you are permitted to assign your interest to the Trust. If there are any written restrictions, we recommend that you contact the general partner in order to determine how best to obtain any written consents. If there are no restrictions in your Partnership Agreement, your interest should be transferred through a written assignment of interest signed by you and acknowledged by your partners.

Limited Liability Company
If you own a single member limited liability company, a simple assignment of interest to your trust is all that is necessary. If you are a member in a multi-member LLC, you will want to review the Operating Agreement in order to determine if there are any restrictions on transferring your membership interest to your revocable living trust. If there are restrictions, we recommend you contact the manager of the limited liability company to determine how to obtain any necessary approvals to transfer the membership interest. If there are no restrictions in your Operating Agreement, your interest should be transferred through a written assignment of interest signed by you and acknowledged by the company. We would be happy to prepare those assignments for you.

Publicly Traded Partnership
If you own an interest in a publicly traded partnership, you should be sure to determine what the cost will be to transfer your interest to your Trust as there are sometimes substantial fees involved. You should contact the partnership directly to determine how to transfer your interest to your revocable living trust.

Closely-Held Corporation
If you own an interest in a closely held corporation (generally, a corporation that is not publicly traded), there may be restrictions on the transfer of your shares to your revocable trust. These restrictions may be in a Shareholder’s Agreement. Shareholder’s Agreements often will permit the transfer of closely held stock to a trust established for the benefit of the shareholder making the transfer. You will want to review any such agreements carefully to determine if a transfer to your Trust is permitted. If the Shareholder’s Agreement does not permit any such transfer, then it may be necessary to contact the company to obtain the consents of the other shareholders in order to allow such a transfer. If a transfer is permitted, it will be necessary to sign a Stock Assignment form, which the corporation can provide (or we can provide a more generic form if they don’t have one), and request that the corporation issue a new stock certificate in the name of your Trust. We strongly encourage you to contact your corporate counsel or ask us to assist you in transferring your shares in any closely-held corporation to your trust to be sure it is done correctly. Additionally, if you own shares in a professional corporation (such as a medical corporation or law corporation) there may be additional statutory restrictions on transfer of your shares. Please let us know if you own any such shares in a professional corporation.

S Corporation
If a closely held corporation in which you are a shareholder has elected to be treated as an “S” Corporation for tax purposes, the transfer of your shares to your Trust will not affect that election since your Revocable Trust is a “grantor trust” for income tax purposes. You will still be treated as the direct owner of the shares even if ownership is transferred to your Trust. If you have specific questions about this, you should contact your accountant.

If you would like for us to help you transfer any of these entities to your trust, or make sure it is allowed, please feel free to contact our office and our asset alignment paralegal, Michelle Saye, would be glad to help. Or simply schedule a 15 minute call with Michelle.

Hoping you and your family had a great holiday season!