Roseville, CA estate planning & probate attorney R. Keenan Davis talks about whether you should put your corporation into your trust. In discussing the matter, the individual explained that the simple answer would be no, but adopting a typical lawyer-like approach, they would then suggest maybe so. The clarification was made that the corporation itself does not become part of the trust; rather, ownership is symbolized by shares in a corporation or ownership interests in a limited liability company (LLC). These documents, serving as evidence of ownership, are deemed suitable for placement into a trust—a practice viewed as reasonable. The trust, conventionally equipped with a schedule detailing assets, is regarded as the culmination of one’s work and efforts.

Recognizing the corporation’s significant value within one’s assets, it was advised that including ownership interests in the trust is a sensible decision. However, a crucial consideration is the assurance that the corporation or LLC maintains sufficient capitalization to manage its liabilities. Failing this, there exists a potential risk that a court, in the event of legal action, could grant access to additional assets, surpassing the protection initially provided by the trust.

The determination to incorporate shares into a trust hinges on various factors, including the financial health of the corporation or LLC, adherence to corporate or LLC formalities, and the availability of adequate insurance. It was emphasized that a comprehensive discussion between the lawyer and the client is imperative to ensure proper capitalization and prevent the misuse of corporate funds before reaching a decision to place shares into a trust.