Entity Documentation and Estate Planning
- When an entity interest is transferred to a trust for estate tax planning, asset protection, control or income tax planning (e.g. the NIIT tax) formalities must be addressed.
- First confirm that the entity is validly existing and key assets are in fact owned by the entity (e.g. for a real estate entity, is the deed in the name of the entity).
- Obtain a certificate of good standing.
- Be certain that the entity has all relevant governing documents prior to transfer (e.g. a shareholders' agreement).
- Have proper documentation to address the transfer to a trust such as an assignment, gift letter, etc.
- Confirm whether there are any prerequisites to transfer (e.g. a shareholder approval, lender consent, etc.).
- Post-transfer governing documents must be signed (e.g. an amended and restated operating agreement).
- If there is a defined value mechanism, all documents, tax returns, stock certificates, etc. should conform with that uncertainty.
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