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Once you form a new business entity, you need to come up with a way to get money into it. This concept is known as capitalization or funding of the business entity.

At first glance, funding an entity seems fairly simple. Don’t the officers of the corporation simply open a bank account and deposit some money? Unfortunately, it is not that simple. The money has to come from somewhere, typically the shareholders.

Funding a new corporate entity is obviously a critical step, but how is it done. There are three primary methods, although one should check with applicable laws in your state to delineate which are available. Regardless, let’s take a closer look.

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Once only available to those who could afford to fund it, can appoint an expensive trustee, the ability to run a trust fund and the tax advantages that it brings are available to all. Known as living trusts, they present an opportunity for all to manage their estate while they are still alive and provide for their loved ones after they have passed on.

By preparing a living trust, the party or parties involved are able to avoid their estates being put through a probate process after their passing. This is a costly and time consuming process, where only the legal system gains and the parties’ heirs are denied access to the funds or assets that are legally theirs.

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