If you own a small business in Michigan, you’ve probably wondered what happens to it if something happens to you. It’s a fair question, and one that doesn’t get asked enough. So: do I need a trust for my small business? For many Michigan owners, the answer is yes.
What a Trust Actually Does for a Business
A revocable living trust holds your assets while you’re alive and passes them to the people you choose when you’re gone, without going through probate. For a business, that matters more than most owners realize.
When a business owner dies with the company in their personal name, that ownership interest usually becomes part of the probate estate. Probate is public, slow, and supervised by a court. While the case works through the system, your business can stall. Accounts may freeze. Decisions that need to be made this week wait for months.
A trust avoids that. If your ownership interest is held in the trust, your successor trustee can step in immediately and keep the business running.
When a Trust Makes Sense
A trust is worth serious consideration if any of these describe you:
- You own real estate through the business or in your own name
- You have a clear successor you want running things
- Your family depends on the income the business generates
- You have partners, and a sudden gap in ownership would create conflict
If you’re a sole proprietor with few assets and no one depending on the business, a will may be enough on its own. But the more the business is worth, and the more people it supports, the stronger the case for a trust.
It’s Not Just About What Happens at Death
A trust also protects the business if you become incapacitated. Without one, your family may have to ask a court to appoint a conservator before anyone can sign checks or contracts. That delay can be costly. A properly funded trust lets your chosen trustee act right away.
Getting It Right in Michigan
A trust only works if the business interest is actually transferred into it. An LLC membership interest has to be assigned correctly, and your operating agreement has to permit it. This is where a Michigan estate planning attorney earns their keep.
The right time to plan for your business is while it’s healthy and you’re still at the helm.
George Remy is a Michigan-licensed estate planning attorney with 18 years of experience serving families and business owners across Washtenaw and Wayne County. Schedule a free 15-minute consultation at remylawpllc.com.