Much of your assets are tied up in your privately held company, and so your overall wealth is largely connected to the value of that company. You want to fund a trust, but rather than doing it with cash assets, you want to do it with stock. Is this possible?
It absolutely is. You can use stock from the privately held company to put in the trust, transferring some ownership to that trust. You can then leave it to an heir if you are to pass away. In fact, some people do this well in advance, while the value of the company is lower, to cut back on taxes. You still control the company if you own the majority of the stock.
Maybe you have stock certificates for a company you don’t own. You can also use that stock to fund the trust, if you’d like. In many cases, trusts are funded with a number of different assets, which could include things like:
- Brokerage accounts
- Nonretirement investments
- Cash assets
- Life insurance policies
- Nonqualified annuities
- Physical personal property
- Personal loans owed to you, both secured and unsecured
- Mineral rights
- Oil and gas rights
- Real estate
Trusts offer a lot of options; if you’re surprised by any of the things on this list, you can see how flexible they are. Don’t assume that the only way you can use them to reduce taxes or to pass on your assets with a bit more control — or both — is by funding them with cash. You have options, and it’s very important that you know what steps to take to set up the plan that works best for your family.