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Protecting angel investments in an estate plan

On Behalf of | Oct 19, 2016 | Estate Planning

Wealthy individuals in Florida may decide to help entrepreneurs to form small startups with investments of capital called ‘angel investments.” An angel investor usually helps a startup that is in its first stages by providing a one-time investment or ongoing investments. In exchange for the funding, an angel investor may receive a return on the investment if the startup does well.

People who have angel investments in their portfolio may have some great opportunities to pass wealth to their beneficiaries in an estate plan. Because companies that receive angel investments are usually very small, the investment could grow substantially over time. An angel investor may want to pass on investments to children and grandchildren while the investment values are still low. That way, the gift only uses a small part of the investor’s lifetime gift tax exemption, though the value of the gift could grow significantly.

Angel investors may decide to place some of their investments in trusts so that the investments can be protected for future generations. A trust can shield an investment from creditors and lawsuits. While creating an estate plan with these assets, people may want to take opportunities to teach their beneficiaries about the investments that they will inherit. Children may start learning how to make investments themselves if they learn why certain companies are in their parent’s portfolio.

A trust can be a valuable estate planning tool for other reasons as well. Unlike wills, trusts do not have to go through what can be an expensive and drawn-out probate process. As a result, beneficiaries can receive the assets that have been left to them in a much shorter period of time. An attorney can outline other reasons why trusts might be appropriate for a client.


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