Legal Question in Wills and Trusts in California

Re: protecting property with trusts

Without knowing the full extent of the business, I would recommend a Limited Liability Company rather than a trust for the business. (Although, I would recommend that she put her property into a revokable trust for other reasons).

An LLC is a cross between a partnership and a corporation. It provides the legal protection of a corporation, while income is distributed like a partnership for tax related matters.

Re: protecting property with trusts

There are trusts which could help, but they are complicated, irrevocable, and must be established in Alaska, Delaware or offshore. The simpler and cheaper solution is to set up the new business as a corporation, give it adequate funding and insurance, and follow the rules of a corporation (such as keeping business assets separate from personal assets). Thus, if someone sues the corporation, only the corporation's assets are at risk. Consult an attorney regarding the specifics of beginning the corporation.