Hi. Lee Philips again. Yep it’s me. I want to talk to you for two seconds about a question that I often get. if I set up a living revocable trust, then I have to have the trust own my assets in order to actually have the trust avoid probate when I die. And the object of the trust is to avoid probate. And it’s a legal trick and I’ve talked about that in other YouTubes. But if I have if I have my trust and I set up an LLC or a corporation this company is going to have a bank account and I’m going to sign my name for it. Well I can tell you that everything that
you sign your name for has to be owned by the trust in order to avoid probate when you die so the question comes up and I get it more frequently than I
would think Do I have to put my company’s bank account checking account in the name of my trust so that when I die the bank account isn’t probated? And the answer is kind of obvious to me but it’s confusing to a lot of people I guess no the bank account is the company’s bank account. it is not your bank account. You are signing your name for the company bank account but you’re not signing it in your individual capacity, you’re signing it as the officer, director, or the manager of the LLC or the officer, director of the corporation,
the company so you’re signing this one on behalf of the company but wait who signs your name after you die to get into that bank account? Well, your operating agreement for your LLC or your bylaws for your corporation are going to say how we get a new manager or a new officer director new president of the company when the president of the company dies. How do we get a new guy? Usually the shareholders get together and they elect a new guy and they have to have notice and they have to do all this and that the other stuff so we get a new manager but wait you own 90% of the stock. You’re dead. How are you gonna vote? You’re not. But you gotta sign your name on the ballot in order to vote. The catch is the company, the stock in the corporation,
the membership interests in the LLC, the papers at the state. They all have to be in the name of your trust so that the company itself is owned by the trust or at least your interest in the company is owned by the trust. And if I’m one member and I’ve got another guy who’s 50% member we’re 50/50 or I’m 51 he’s 49 I need to make sure that his interest is held in a trust because if he dies my company is gonna be tied up in probate for a couple of years when we figure out what to do with his 49%. Now you can alleviate a lot of this by writing things into the operating agreement or the bylaws but the basic concept is your trust has to own the company. And of course if your trust owns the company and the company owns the bank account there’s no probate. So can you see indirectly your trust does own the bank account but not directly. It just owns the company which owns the bank account. Hopefully that clarified it a little for you and you can see the relationship
between your living revocable trust and the bank account of your LLC or your corporation and lawyers always forget not always, that’s an absolute but lawyers often fail to say, “You know, your interest in your company needs to be owned by your trust so that when you die the company doesn’t have to go through
probate.” And the fact is if the company gets caught in probate the chances of it dying are considerable because you got to have the court’s approval you gotta do all this crap and it takes two years and by that time the company has lost its traction it’s if it’s a doctor’s office, practice, they’ve lost all the patients the company, the practice becomes worthless. The company dies. So it’s critical that you understand this relationship between your living revocable trust and your company your LLC or corporation your limited partnership whatever it is This is Lee Phillips talking about company bank accounts, I guess and ownership of your company.