Business planning
Should Your LLC Be Owned by Your Trust?
You formed an to protect your business. You created (or are thinking about) a to protect your family. Here’s the question almost nobody asks until it’s too late: do the two actually work together?
For most business owners, the answer should be yes — by making your the owner of your membership interest.
What happens if you don’t
Your membership interest is an asset, just like your house or your brokerage account. If you personally own it when you pass away, it generally goes through — even if everything else you own is in a .
That means the business that supports your family could sit in court-supervised limbo for months: bank signatories in question, contracts in doubt, no one clearly authorized to make decisions. For a business that depends on you, that delay can do real damage. Vendors, employees, and customers don’t wait for .
How ownership fixes it
When your owns your interest, there’s no gap and no court. The you chose steps in immediately with clear legal authority. The business keeps operating, payroll keeps running, and your family keeps the value you built.
You lose nothing in the process. You’re still the of your own , still the manager of your , still in complete control day to day. The change is invisible until the moment it matters.
Doing it right (this is the part people skip)
Moving an into a isn’t just signing one document. Done properly, it involves:
- An assignment of membership interest transferring ownership to the
- Checking your — many have transfer restrictions, and multi-member LLCs often require partner consent or trigger buy-sell provisions
- Updating the and records to reflect the as member
- Coordinating with your if you have partners, so the two documents don’t contradict each other
- Confirming nothing disturbs your liability protection or tax treatment (a revocable is generally tax-neutral, but the details deserve attention — especially for S-corporation elections, which have strict rules about shareholders)
This is exactly where having one attorney who handles both estate planning and business planning pays off. When the lawyer and the business lawyer are different people who never talk, things fall through the cracks. When they’re the same person, your plan works as one system.
The bottom line
If you own an and a — or you’re planning either — make sure they’re introduced to each other. It’s typically a modest, flat-fee project, and it’s one of the highest-value pieces of planning a small business owner can do.
Own a business? Mention it in the questionnaire and Britt look at how your business and fit together.
This article is for general informational purposes only and is not legal advice. Every situation is different — for guidance on yours, request a consultation.