How Intentional Planning Empowers Family Business Trustees
September 4, 2025
A family‑business trustee can be compelled to sell unless the trust legally mandates retention. Learn why coordinated legal, tax, accounting, and financial planning—like the integrated approach at Omni 360 Advisors—is essential for trust-based succession success.
Transferring your family business ownership into a trust may seem like the ultimate safeguard for legacy and continuity—but as Adam Streisand’s Spring 2025 ABA article reveals, succession through trust instruments is far from fail‑proof (American Bar Association). Without precise drafting and strategic oversight, beneficiary discord and legal gray areas can put your intentions—and the business itself—at serious risk. That’s why business owners, especially those considering or living a transition via trust ownership, need an intentional, multidisciplinary approach to planning: one that coordinates legal, tax, accounting, and financial expertise, just as we deliver at Omni 360 Advisors.
The Core Issue: Trustee Immunity ≠ Mandate to Retain
Streisand highlights a critical technical distinction in trust law: just because a trustee is shielded from liability for retaining the trust-owned business (via exculpatory provisions), it doesn’t mean they are compelled to keep it forever (American Bar Association). Many trusts include clauses waiving diversification obligations or protecting trustees from liability—but unless the trust expressly mandates retention, the trustee still holds discretion—and courts can require a sale when retention no longer serves the trust’s purpose (American Bar Association).
Judicial Gaps: Rare Clarity, High Stakes
U.S. courts have rarely squarely addressed whether a trustee can be forced to sell a trust-owned business—even when retention‑friendly language exists. The few analogous cases (e.g., involving real estate, livestock, or stocks) offer limited guidance and underscore how lightly drafted or overly broad trusts can trap everyone involved in succession disputes (American Bar Association). Without firm clarity, beneficiaries—especially those not involved in operations—are often left with little recourse.
Why Intentional Planning Matters—and What to Do
To avoid ambiguity or future conflict, consider these drafting and coordination essentials:
- Specify Trustee Powers Clearly
- Explicitly outline when and whether a trustee can sell or must retain assets.
- Embed Flexibility with Conditions
- If retention is preferred, include “trigger” events (market downturn, beneficiary need, litigation risk) that allow sale or liquidity events.
- Coordinate Legal, Tax, Accounting & Financial Advice
- Court petitions, valuation methods, tax implications, liquidity planning, and beneficiary outcomes all interlock—and only succeed when all advisors are aligned.
- Document Decision‑Process Mechanisms
- Include periodic reviews, beneficiary consultations, and dispute‑resolution protocols to reduce post‑settlor conflict.
- Plan for Liquidity Options
- Designing for potential buy‑outs, staged transfers, or strategic sales (e.g., to outside investors) helps avoid last‑minute chaos.
The Omni 360 Advisors Advantage
At Omni 360, our interprofessional approach ensures:
- Legal Precision: We draft trust instruments with unambiguous retention or sale provisions, aligning with your family’s values and vision.
- Tax Optimization: Coordinating with trust features (like deferral of capital gains or generation‑skipping exemption planning) to preserve value.
- Accounting Clarity: Ensuring valuation methodologies and tax reporting align with long-term trust objectives.
- Financial Strategy: Shaping liquidity scenarios—sale, dividend structures, or partial buy‑outs—that support both business stability and beneficiary needs.
When trustees have clear direction and flexible tools, litigation risk declines—and the family’s legacy thrives.
The road from trust‑based succession to harmonious transition demands more than good intentions—it requires precision, foresight, and seamless coordination of legal, tax, accounting, and financial disciplines. Without this, even the best‑intended trusts can go awry. At Omni 360 Advisors, we specialize in crafting and executing these trust structures for business owners and multigenerational families. Need to ensure your family business trust fosters legacy—not litigation? Schedule a strategy meeting with Omni 360 Advisors, or book a legacy or estate‑plan review with Omni Legacy Law, and make your vision of stability a reality.
Original article cited: Adam F. Streisand, “‘I’m Not Saying I’d Make a Better CEO; That’s Unsaid.’ Compelling the Trustee to Sell the Family Business when Succession Goes Awry,” Real Property, Trust and Estate Law Journal, Spring 2025 (American Bar Association, calawyers.org).
This blog was developed with the assistance of AI-based tools for research, drafting and editing support (Chat GPT), and reviewed by OMNI 360 personnel for accuracy and relevance.
