This is the third part of a three-part blog post. Read Part 2 – A Limited Liability Company.
Using Living Trust & LLC Together
Here’s how everything ties together between the revocable living trust and a limited liability company (LLC). As the writer, I assign my economic interests in the copyrights and the LLC to the living trust while maintaining full ownership. As the trustee of the living trust, I provide the LLC with a revocable license to publish the copyrights in any format. As the owner of the LLC, I’m publishing the licensed copyrights to make money.
If someone wins a lawsuit against the LLC, I (the trustee) can revoke the license for the copyrights to force the LLC to halt business. That leaves only the bank accounts, office supplies and furniture for liquidation under a court order. Without the copyrights, the LLC has nothing to sell. Meanwhile, after the court drama is over, I can start a new business all over again.
If a judge decides I haven’t maintained the LLC properly and declares the “corporate veil” pierced, all my personal assets—including the copyrights—are at risk. I could further protect my copyrights by putting them into an intellectual property holding company (IPHC). As with the living trust, the IPHC issues a revocable licensing agreement to the LLC for publishing the copyrights. This creates another legal layer that an opposing attorney will have to overcome to get at the copyrights.
The living trust comes into play when you die and your heirs inherit your estate without having to go through a very expensive and time-consuming probate process before a judge, where everything becomes public. Most people who accumulated a lifetime of assets, spend very little time thinking about—much less planning for—their eventual demise. A properly structured living will and LLC can keep your assets from being liquidated to pay estate taxes.
The living trust and a LLC are powerful tools—if done right. I’m doing this without any professional advice because I’m confident from my research that I’m doing this correctly. After being a sole proprietor for the last six years, I’m ready to take my personal life and writing business to the next level. If everything goes well over the next few years, I’ll do a full review with an attorney and make whatever changes as needed.