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Home » LLC » Using Irrevocable Trust to Create Multi-Member LLC

Using Irrevocable Trust to Create Multi-Member LLC

ByJon Alper July 12, 2013May 22, 2020

Most people who contact me to assist in drafting LLC operating agreements for asset protection know that only multi-member LLCs have asset protection benefits for Florida residents. Many clients want to know about options to add a second member to an LLC that is essentially the client’s own business or investments.

When a client has no participating partners in a business it is difficult to find the second member to his business LLC. One of my clients considered making his parents a minority partner in his LLC business but was concerned about his parents having title to the LLC interest. Specifically, the client did not want to expose interests in his business to the parents’ creditors or to probate upon his parents’ deaths. Also, he did not want his parents’ estate plan to devise any interests to his siblings.

The solution we agreed upon was to have his parents set up an irrevocable trust for the client’s benefit and for his parents to title a minority share of the LLC in the parents’ trust. The spendthrift provision in the trust agreement would protect the LLC interests during his parents’ lifetimes. Upon his parents death the share would be held in continuing trust for the client’s benefit thereby maintaining the LLC’s second member even after the parents’ death. The parents’ LLC interest will not be part of a probate and will not be shared among other heirs as the trust agreement will preserve the LLC interests for the client’s benefit.

Last updated on May 22, 2020

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Jon Alper

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  • Learn More
    • Asset Protection
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      • Doctors
      • Equity Stripping
      • Exemptions
      • Florida Residency
      • Fraudulent Transfers
      • Homestead Law
      • How Attorneys Help
      • Strategies
      • Tenants By Entireties
      • UTMA Accounts
    • Business Planning
      • Business Entities
      • LLCs
      • LLC Operating Agreement
      • Real Estate Investors
    • Offshore Planning
      • Nevis LLC
      • Offshore Bank Accounts
      • Offshore Planning
      • Offshore Trusts
    • Judgment Collection
      • Judgment Collection
      • Bitcoin and Cryptocurrency
      • Deficiency Judgments
      • Fact Information Sheet
      • Head of Household
      • IRS Tax Debt
      • Not Paying Judgments
      • Statute of Limitations
      • Wage Garnishment
      • Writ of Garnishment
    • Wills and Trusts
      • Avoiding Probate
      • Estate Planning
      • Gun Trusts
      • Inheritance Tax
      • Irrevocable Trusts
      • Last Will and Testament
      • Living Trusts
      • Living Will
      • LGBT Estate Planning
      • Power of Attorney
      • Probate
      • Special Needs Trust
      • Trust Administration
    • Bankruptcy
      • Attorney Fees
      • Chapter 7 Bankruptcy
      • Chapter 13 Bankruptcy
      • Dealing With Creditors
      • Involuntary Bankruptcy
      • Moral Issues
      • Orlando Bankruptcy
      • Student Loans
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      • Lady Bird Deed
      • Land Trusts
      • Quit Claim Deed
      • Warranty Deed
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      • Adult Adoption
      • Grandparent and Relative Adoption
      • Private Adoption
      • Readoption
      • Same-Sex Couples
      • Stepparent Adoption
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