For many business owners, their company reflects years of work, family sacrifice, and long-term vision. In some families, it is also a significant source of wealth and a major part of the legacy they hope to pass on.
That is why asset protection for business owners is often about more than shielding value from risk. It is also about protecting continuity, reducing disruption, and preserving founder intent over time.
A trust may help provide that structure.
When thoughtfully designed by the business owner’s attorney and advisory team, a trust may hold a business interest in a way that supports continuity through life events such as retirement, incapacity, death, divorce, creditor pressure, and family disputes. For closely held and multigenerational businesses, that stability can matter just as much as financial protection.
Why business owners often look to trusts for continuity
Many business owners know they need a succession plan, but far fewer have one that is fully documented and communicated.
In PwC’s 2023 U.S. Family Business Survey, 72% of respondents said they wanted the business to stay in the family, but only 34% said they had a robust, documented, and communicated succession plan in place in 2021.
Deloitte also reported in 2024 that only 24% of current-generation leaders and 13% of next-generation family members strongly agreed their family-owned business would continue to run smoothly and without interruption if an important family employee moved on, retired, or passed away.
Those figures help explain why continuity matters. When ownership transition is unclear or when there is no durable process for incapacity, families and businesses may face disruption at the moment they most need stability.
A trust may help create a framework around the ownership interest. It may also place a neutral fiduciary in a position to administer the trust according to its terms.
At Cumberland Trust, we can fill the role of trustee for families. As an independent corporate trustee, we focus on trust administration and collaboration within a directed trust structure.
The benefits of putting a business in a trust
Business owners may consider establishing a trust to hold the family business for tax reasons or asset protection. Those concerns matter, but for many closely held businesses, the goals in establishing a trust are also deeply personal.
A trust may help support:
- Continuity of ownership
- The founder’s intent
- A clearer process if the owner becomes incapacitated
- The opportunity to name advisors or trust protectors
- Protection from certain outside pressures, depending on the structure and applicable laws
Protecting both the business and the family
When working with a corporate trustee like Cumberland Trust, business owners may rely on a neutral third party to administer the trust in a way that provides continuity across life events that might otherwise cause confusion or conflict.
For example, a business owner may have a significant part of family wealth tied up in a closely held company. If that interest is held in trust, the trust structure may create an added layer of separation between the individual owner’s personal financial pressures and the business itself. That may help reduce the chance of rushed decisions that could disrupt the company, such as forcing a sale at the wrong time or undermining a long-term transition plan. Instead, administration can proceed with the corporate trustee coordinating alongside the family’s chosen legal counsel, financial advisor(s) for liquid assets, trust advisor(s) managing the trust’s interest in the business(es), and tax advisors.
For preserving the business across generations, this stability matters. It helps keep attention on protecting the legacy of the asset rather than reacting to immediate pressures.
Navigating family expectations in the family business
This is one of the most common challenges in family business planning.
For example, when a business owner contributes the business to a trust, the uncertainty that follows life events, like an unexpected death, may be minimized using business succession planning and thoughtfully drafted trust terms. Instead of the family having to make difficult decisions while grieving, the neutral, corporate trustee, alongside named advisors or trust protectors, may help ensure the owner’s wishes are carried out according to the trust terms.
Should a family member be named as trustee, they may feel uncomfortable serving in such a role when other family members are also beneficiaries of the trust. This is why naming a neutral corporate trustee may be especially valuable. The objectivity that a corporate trustee and named advisors bring may reduce tension, avoid interruptions in leadership, and help keep the business moving forward.
Cumberland Trust’s role with a trust-owned business interest
Cumberland Trust administers the trust-owned business interest in accordance with the trust terms and direction of named advisors. We do not:
- Operate the business
- Replace the company’s leadership
- Force liquidation as a default approach
- Serve as the manager of an LLC or the general partner of a partnership
Under our directed trust model, trust administration is separated from investment or asset management. This allows business owners and beneficiaries to continue working with their chosen advisors while Cumberland Trust focuses on the fiduciary and administrative role tied to the trust.
Cumberland Trust focuses on administering the trust with objectivity and continuity, allowing the named trust advisor(s) and manager(s) to make decisions regarding the trust’s ownership interest in the company.
Why business owners choose Cumberland Trust
Business owners often need an independent corporate trustee that will serve when a trust owns complex, illiquid assets.
We work with your existing team of professionals.
Our directed trust model integrates seamlessly with your existing advisory team. Your attorney, CPA, financial advisor, trust advisor(s) managing the business interest, and other professionals remain important to the overall structure, while Cumberland Trust focuses on trust administration.
We are experienced in administering trusts that own complex assets and holdings.
Many corporate fiduciaries prefer liquid assets and may pressure business owners to sell concentrated or complex holdings. Our special assets team has over 25 years of experience administering trusts holding illiquid assets such as closely held businesses, real estate, timberland, and mineral rights.
We provide a neutral corporate solution.
Family businesses can involve emotionally charged decisions. A neutral trustee may help carry out the trust terms with consistency and objectivity, which may help minimize tension during difficult transitions.
We offer high-touch service.
Cumberland Trust maintains fewer client relationships per trust officer than many larger institutions, allowing for more responsive and personal trust administration.
Protecting assets is about more than shielding value–it’s about protecting legacies.
A thoughtfully structured trust may help support a business owner’s asset protection goals. And when a closely held business is owned in trust, Cumberland Trust may serve as an independent trustee focused on administration, objectivity, and collaboration with your chosen advisors.
To discuss how Cumberland Trust works with business owners and trust-owned business interests, contact us today.
FAQs
What does the directed trustee of the trust owning my business do?
The trustee administers the trust owning the business interest according to the trust’s terms and fiduciary responsibilities. That role is distinct from operating the business itself. Cumberland Trust does not manage or make investment decisions regarding the trust’s ownership interest in the business. Instead, Cumberland Trust follows the direction of the trust advisors you have named to make decisions pertaining to the trust’s ownership interest in the business. Cumberland Trust’s role as trustee includes the following aspects of administration: distributions, record keeping, reporting, beneficiary communication, and attentive client service.
Does Cumberland Trust interfere with business operations?
Cumberland Trust does not run the business. It serves as trustee of the trust owning the business interest while the company retains its operational leadership. Cumberland Trust also does not manage or make investment decisions regarding the trust’s ownership interest in the business. Instead, Cumberland Trust follows the direction of the trust advisors you have named to make decisions pertaining to the trust’s ownership interest in the business.
Will a trustee force a sale of the business if it is owned in trust?
Cumberland Trust works with trusts that hold illiquid assets, including closely held business interests, and does not approach administration with a default expectation of liquidation. Cumberland Trust does not manage or make investment decisions regarding the trust’s ownership interest in the business. Instead, Cumberland Trust follows the direction of the trust advisors you have named to make investment decisions pertaining to the trust’s ownership interest in the business.
How are trust-owned businesses structured?
Common structures include LLCs, limited partnerships, family limited partnerships, and corporations.
These structural details are often established by the business owner’s attorney, CPA, and financial advisor. Cumberland Trust does not create the plan. We serve within a directed trust model.
Disclaimer: This is not intended to constitute legal advice. Please seek legal counsel to determine the best estate planning for you based on your specific needs and circumstances.