Using Family Trusts (CONT’D FROM PAGE 28)
ing of his friends. Furthermore, if Frank remarries and then dies, his new spouse, a stranger to the family, might end up owning a third of the business. And that person might demand an exorbitant buyout to avoid a lawsuit. “In this example, when Deborah dies without any descendants, a trust can call for her interest to pass on to her siblings or their de- scendants,” says Scroggin. “Trusts often are used to as- sure that business interests are retained for the benefit of family members rather than passing to outsiders.” Stay Flexible The above scenarios illustrate the flexibility of irrevoca- ble trusts. They can do all kinds of things for people who are too young to run a business, have no interest in doing so, are incapacitated, or need to be protected from their own damaging decision-making habits. Trusts solve busi- ness problems by separating legal ownership and control of a business from the enjoyment of the business assets by beneficiaries. Flexibility, though, runs both ways. Attorneys advise against micromanaging the family business transition. “Sometimes people take control too far by not including enough flexibility for the beneficiaries,” says Sampson. “As a result, what seems like a reasonable provision in a trust today might make no sense some years down the road.” Sampson gives this example: Mark heard that “incentive trusts” could be established to obviate the problem of a
BCN(US)202209(QS1025)(o)(出血5mm).pdf 1 2022/8/30 下午 02:02:46 To Avoid Claims Arising From A Childless Marriage Harris and Marge have three children named Deborah, Francine and Bart. Deborah is married to a man named Frank but has no children and is not expected to. Harris and Marge are concerned that if Deborah is given some of the equity and then dies, the equity will pass on to Frank, a nonfamily person who may try to dictate business deci- sions, and make unreasonable demands, such as the hir- while the equity of the business, along with any profits, re- mains in the trust for protection from lawsuits. In the same way, a trust can protect business assets from the claims of creditors if the inheriting person is in debt. To Avoid Claims Arising From Multiple Marriages Multiple marriages can create their own problems. James wants to make sure that if he dies his wife Mary receives income for life from the company dividends and asset distributions, so that she can take care of their chil- dren Betty and Jack. However, if Mary should remarry and then later die, James wants to make sure the money from the business then goes directly to Betty and Jack, and not to Mary’s new spouse or to that individual’s own children. Again, a trust can mandate this more complex asset dis- tribution pattern. “The division between ownership and benefits can be helpful when people get married more than once and have children from multiple spouses,” says Sampson.
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November 21, 2022
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