If you’re a small business owner with an annual revenue of over three to four million dollars, your thoughts have likely turned toward asset protection. You might wonder whether you should set up a trust or an LLC since both have appealing advantages when it comes to preventing financial losses. The guide below explains their different merits.

Trusts

A trust is a document that assigns the legal title of your property to one individual, known as a “trustee,” for the benefit of at least one additional individual, known as a “beneficiary.” When you transfer property to a trust, the trustee will manage it according to your instructions. Though the beneficiary will hold equitable interest, they will not have legal title to the property. 

One of the main benefits of a trust is you do not have to file any documentation through government entities, making asset protection quicker and easier to establish. Since the trust does not count as part of the estate, the trustee and beneficiaries will not have to worry about paying taxes. Trusts also help heirs keep assets organized, ensuring that the correct parties have the ability to access them at the appropriate times. 

LLCs

“LLC” stands for “limited liability company.” An LLC operates as its own legal entity and may include one primary owner along with several partial owners. When you place property or assets into an LLC, all members will have partial ownership. 

Many business owners choose to form LLCs because they offer the liability protection of corporations and the tax breaks of partnerships. Another advantage of LLCs is they permit you to structure them so that creditors cannot gain control of them when going after debts.

When you’re looking for asset protection solutions, get in touch with Economic Strategist. They offer business consulting and financial management to clients throughout the Dallas-Fort Worth, TX, area. Call (214) 383-1350 to open up a trust for asset protection, and visit the website to learn more about how they can help you manage your wealth.