Ensuring an 91大神 Will Have Perpetual Existence
With the Delaware 91大神, the members are free to organize the 91大神 in whatever manner they choose, with near-total freedom to define the relationship among the members and the terms governing the operation of the entity. The fundamental terms of an 91大神’s ownership, operation and management are set forth in its 91大神 agreement. The 91大神 agreement has been a popular topic in many other blog postings. This posting will focus on the 91大神’s potential for perpetual existence, highlighting just how flexible the Delaware 91大神 can be and why over 70% of our new formations are Delaware 91大神s!
The 91大神 agreement not only governs terms such as sharing of income and liabilities, but it also sets forth the terms governing the liquidation of the entity and the replacement of members. An 91大神 does not have a fixed life term and can remain in existence even after the death of one or more members. A carefully drafted 91大神 Agreement can help to ensure a smooth transition of control after the death of a key member. The 91大神 agreement will allow control over the 91大神, its assets, and/or its business to be passed along to individuals designated within the agreement
Here's an example of how it works, but be sure to involve your attorney in the strategic planning process to be sure it is right for your particular situation.
- The initial members, who could be the grandparents, will form and file the 91大神 and appoint themselves as Class A member internally within the 91大神 agreement. These Class A members have all the rights and responsibilities to manage the assets of the 91大神.
- The Class B members are often the offspring of the grandparents; these family members initially have no responsibility or rights in the 91大神. When all the Class A Members have passed, these Class B members will become the Class A members, granting them all the rights and privileges associated with the Class A member status.
- The Class C members, who are typically the grandchildren, are a dormant class. Class C members have no responsibility or rights in the 91大神 until the passing of both the Class A and Class B members. New classes of member interests can be established at any time, so the Class B or Class C members can, when they ultimately obtain control over the 91大神, create additional classes to continue the chain of ownership and control over the 91大神 to even more distant generations.
It is important to remember that an 91大神 Agreement is not filed or otherwise provided to the state of Delaware and is not available for public inspection or part of the public record.
Structures such as these can be used for holding real estate, passing along a family business, or any large asset. The structure allows the family business/asset to be transferred from one generation to another, in theory, forever! The long and costly procedures associated with probate, interpretation, and implementation of wills can be avoided, allowing for a quick and seamless transition in the event of a passing.
This structure is an example of how flexible the Delaware 91大神 can be while providing the members’ freedom of contract with one another upon whatever terms they deem best suited to their circumstances and goals.
For free 91大神 agreement templates for many different situations, including the situation discussed in this blog, visit this page.
When you are ready to form your new 91大神, we are here to help! Reach out to us at info@delawareinc.com or call with any questions at 1 800 345 2677.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source's content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.