I am administering a trust that holds an interest in a business. Do I have to sell it?

When administering a trust, some trustees automatically assume that they must sell of any business interest that is held in the trust. This is not always the case, however. Under some circumstances, the trustee may instead opt to hold the business interest in trust for a period of time.

Determine Whether You Have to Sell a Business Interest Held in Trust

Before immediately selling the business interest held by the trust that you are administering, consider whether you are truly required to sell and whether doing so is in the best interest of the trust or the beneficiaries. To do so, evaluate the following:

  1. Consult with an experienced attorney who is familiar with both the trust administration process and reviewing business documents.
  2. Review the terms of the trust. Are you required to sell under its provisions? Or are you given the option to sell at your discretion? If the instruction to sell is discretionary, you may not have to sell if you do not feel it is in the best interest of the trust or its beneficiaries.
  3. Review the accompanying business documents. Is there a buy-sell agreement? If not, there may be buy-sell language within the shareholder agreement, operating agreement, or partnership agreement. The language in these documents could dictate ownership of the shares upon the death of one of the business owners.
  4. Abide by any instructions from the court. Of course, if this matter has involved judicial intervention, you must abide by any court order related to the sale of the business interests.

Important decisions like these are often handled in the best manner with the assistance of an experienced professional. We encourage you to view our client testimonials page today to learn more about how we have helped others implement the estate plans of their loved ones.


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