8 Steps to Take as a Trustee Overseeing a Trust With Business Interests

After your loved one passes away, you may find yourself in charge of administering his or her trust. As the successor trustee, you have an obligation to manage and protect the assets of the trust. This trust may hold an interest in a business that your loved one once owned or operated. Your responsibilities relating to this business interest are very important.

What to Do When a Trust Holds a Business Interest

If you are the trustee of a trust that holds an interest in a business that was owned by the decedent, you must act quickly and carefully to ensure that this asset is protected properly. The following are eight steps to consider taking:

  1. Consult with an experienced and knowledgeable estate administration attorney. Administering a trust that holds business interests comes with many unique and complicated tasks and issues that benefit from the guidance of a professional.
  2. Carefully review the terms of the trust to determine the decedent’s intent with regard to these business assets.
  3. Determine whether the business is a corporation, limited liability company, sole proprietorship, or partnership.
  4. Depending on the type of business, carefully review the relevant business documents. These may include buy-sell agreements, by-laws, minute books, partnership agreements, and operating agreements.
  5. Assess whether the trustee, on behalf of the trust, is responsible for any of the day-to-day management of the business.
  6. Obtain a valuation of the business interest now held in the trust. This is very important for tax purposes.
  7. Determine whether the trustee, on behalf of the trust, has any voting rights or a controlling interest in the business.
  8. Develop a strategy for either the continuation of the business or its winding down.

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James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm
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