Can a Trust Own an LLC?

A trust can own an LLC. When a trust owns an LLC, the trust itself becomes an LLC member, holding the ownership interest instead of the trust’s beneficiary.

The structure allows business owners to avoid probate of their LLC. Certain types of trusts can also protect the business interest from the trustmaker’s creditors.

What Is a Trust?

A trust is a legal structure in which one party (the trustee) holds legal title to property for the benefit of one or more other parties (the beneficiaries).

The most common type of trust is a living trust. A living trust allows the grantor to manage assets now while naming successor trustees to take over if they become incapacitated, and enables assets to pass to beneficiaries outside of probate.

What Is an LLC?

A limited liability company (LLC) is a flexible business entity that shields the members from the company’s liabilities. It protects them from creditor claims or lawsuits against the LLC.

An LLC is managed by appointed managers, with members investing capital and sharing in profits and losses proportionally.

In some states, including Florida, creditors cannot seize a debtor‑member’s ownership interest in a multi-member LLC. Instead, creditors are limited to obtaining a charging order, which only entitles them to future distributions.

How Trust Ownership of an LLC Works

When a trust owns an LLC, the trustee becomes a member of the LLC in their capacity as trustee. The LLC’s ownership interest is often held in the name of the trust (usually listed as “[Trustee Name], Trustee of [Name of Trust]”), instead of an individual’s name.

The trustee manages the LLC’s interest pursuant to the terms of the trust agreement. The trust can specify whether the trustee may directly manage the LLC or must appoint an LLC manager. In practice,

The trustee has a fiduciary duty to manage the LLC in the best interests of the trust beneficiaries. When there is more than one LLC member, the trustee will vote or act on behalf of the trust in LLC matters.

The trust agreement can specify how the trustee should handle the LLC. For example, the trust can dictate whether the trustee should continue the business or liquidate it upon the death of the trustmaker.

All assets owned by the LLC are effectively held under the trust’s umbrella. In other words, the LLC becomes just one of the trust’s assets. If the trust is revocable (living trust), the grantor still retains control and can change the trust. If it is irrevocable, the grantor has relinquished control to the trustee under fixed terms.

Liability from LLC Property

Having the trust own the LLC helps protect the trust and its other assets from liabilities arising out of the LLC’s activities.

For example, a typical structure involves a trust owning an LLC, which, in turn, holds a rental property. If someone is injured on the property and sues, their claims would generally be limited to the assets of the LLC. The trust’s other separate assets should be insulated from that property-related liability.

The reverse is also beneficial: if the trust’s grantor is personally sued, an LLC owned by an irrevocable trust may be harder for creditors to reach, since the LLC interest is not in the grantor’s name.

Benefits of a Trust-Owned LLC

Trust-owned LLCs combine the advantages of business entities and trusts. Here are some key benefits of having a trust own an LLC:

Probate Avoidance

Placing an LLC interest into a trust allows that business to bypass probate and pass directly according to your trust instructions upon death. Without a trust, your ownership in an LLC (especially a single-member LLC) would typically have to go through probate as part of your estate, which can be time-consuming and public.

By contrast, the trust can continue to own and operate the LLC immediately after your death, under the management of a successor trustee, without requiring court intervention. This ensures business continuity and a smooth transition to your heirs or chosen beneficiaries.

In addition, trust ownership lets you set detailed instructions for what should happen to the LLC if you become incapacitated or pass away.

For instance, you can stipulate that the trustee should retain the business for a certain heir, or even eventually dissolve or sell it and distribute the proceeds, all without needing a court’s approval.

Privacy and Anonymity

Using a trust can provide a degree of anonymity for the LLC’s owner. In public records (such as state LLC filings or deeds owned by the LLC), typically the trust’s name and trustee are listed, rather than your name as the beneficial owner.

This means curious parties searching public databases may not easily trace the LLC back to you, especially if the trust’s name is neutral (and even more so if the trustee is a third-party or corporate trustee).

For example, “XYZ Trust” might be listed as a member of the LLC instead of John Smith. Florida’s public filings do not require listing LLC members or beneficiaries, so a trust can help keep your connection to the business out of easily searchable records.

Other states that do require disclosure of members may only see the trustee’s name. Keep in mind that in a lawsuit or creditor scenario, a determined party can use legal discovery to uncover beneficial ownership. Still, for general privacy from the public and potential lawsuit hunters, a trust (especially one with a third-party trustee) can significantly increase confidentiality around your business holdings.

Asset Protection

In some situations, it can be helpful to use an irrevocable trust when needing a second member of an LLC.

In jurisdictions where single-member LLCs have weaker protection, adding even a small second member can preserve the charging order protection for LLC assets.

Sometimes, clients without a business partner will create an irrevocable trust for a family member (such as a spouse or child) and gift a small percentage of the LLC to that trust. The trust’s trustee then becomes a minority member.

This multi-member LLC structure can prevent creditors from seizing the LLC outright. The creditor is limited to a lien (charging order) on distributions.

To ensure this works, the original owner should usually not be the beneficiary of that trust (you might name your kids or someone else), keeping the trust’s ownership legally distinct.

This approach “converts” a single-member LLC to a multi-member one without bringing in an outside business partner, leveraging a trust to strengthen asset protection. However, you should still be cautious of concerns related to fraudulent transfers.

How to Set Up a Trust-Owned LLC

Setting up a trust to own your LLC involves several steps to ensure the transfer is completed correctly and recognized legally. You must first create the trust and then transfer (assign) your LLC ownership to it.

1. Create the Trust.

If you don’t already have a trust, you’ll need to establish one before transferring the LLC.

Decide on the type of trust (revocable living trust vs. irrevocable trust) based on your goals. Work with an attorney to draft the trust agreement, naming a trustee and beneficiaries and including any special instructions for managing the LLC.

For example, the trust could explicitly authorize the trustee to continue operating the business or require the LLC to be held for a certain beneficiary.

2. Review the LLC’s Operating Agreement.

Before transferring ownership, check the LLC’s operating agreement for any restrictions on transfers.

Some LLCs require advance notice to other members or even approval for a transfer of membership interests. Others might prohibit transfers to certain entities.

Ensure the operating agreement permits a transfer to a trust or be prepared to amend it. If you are the sole member, you can amend the operating agreement yourself to add the trust as a member or substitute yourself with the trust.

If there are other members, obtain any required consent.

3. Assign the LLC Interest to the Trust.

This is the core transfer step. You’ll prepare an Assignment of Membership Interest, whereby you, the current owner (assignor), assign your interest in the LLC to the trustee of your trust (assignee).

This document serves as proof that the trust now owns the LLC interest.

Deliver a copy to the other members (if any) and keep it with the LLC records.

4. Tax Updates.

After the transfer, you will want to inform relevant third parties that the trust is now the owner of the LLC.

If you were using your Social Security Number for a single-member LLC’s taxes (disregarded entity), you might continue to do so if it’s a revocable grantor trust (since for tax purposes it’s still you).

But if the trust is irrevocable, or especially if the trust will be a separate tax entity, you may need a new Tax ID (EIN) for the trust or LLC.

Often, single-member LLCs don’t need a new EIN when the owner changes from individual to grantor trust. However, check with a CPA.