Should your trust own your LLC?
A trust can own an LLC, and for many owners a revocable living trust should: it can keep the business out of probate so someone you chose can act right away. But the transfer only works if your operating agreement, your tax election and your lender all allow it, and if the assignment was actually signed.
By Greg Garone, CEPA® · Published by Morrowgate Private Wealth · Last reviewed October 2026
Is your trust set up to own your LLC?
Four questions. Nothing is saved or sent.Answer the questions to see what to raise with your attorney.
Go over my answers with GregThe trust that owned nothing
Rich and his attorney set up a revocable living trust in 2017. The trust document named his brother as successor trustee to run the family’s property management LLC if Rich died.
Nobody ever signed the assignment moving Rich’s LLC interest into the trust. When Rich died, the trust was empty. His interest went through probate, and his brother had no authority to sign leases or pay contractors until the court appointed an executor.
The plan was right. The paperwork was never finished.
Three ways the trust-LLC setup fails
The trust was never funded
The trust document names a successor, but the LLC interest was never assigned to it. It goes through probate anyway.
The operating agreement says no
Transfer restrictions or consent requirements weren’t followed, so the transfer may not be valid when it matters.
The S election is put at risk
After the owner’s death, a trust that doesn’t qualify, or misses its election deadline, can terminate the S corporation status.
What usually fixes it
- A signed assignment of your LLC interest to your trust, with member records updated
- An operating agreement that permits transfers to your trust and lets your successor trustee act
- For S corporations: a plan for QSST or ESBT elections after your death
- Lender, landlord and license approvals handled before the transfer
Questions for your attorney
- Is my LLC interest actually assigned to my trust today?
- Does our operating agreement allow the transfer and let my successor trustee vote?
- If we’re taxed as an S corporation, what must my trust do after I die?
Trusts and LLCs: common questions
Can a trust own an LLC?
Yes. A trust can be a member of an LLC, and the trustee exercises the member’s rights. With a revocable living trust, you’re usually your own trustee, so day to day nothing changes.
What are the tax benefits of a trust owning an LLC?
For a revocable living trust, generally none: you’re still taxed as before and the business is still in your estate. The benefit is control and avoiding probate. An irrevocable trust can move value out of your estate, but you give up control of what you put in it.
Can a trust own an S corporation?
Only certain kinds: grantor trusts (including most revocable living trusts during the owner’s life), qualified subchapter S trusts (QSSTs), electing small business trusts (ESBTs), and some trusts for a limited time after a death. The wrong trust can end the S election, so check with your CPA.
How do I put my LLC in a trust?
Usually with a written assignment of your membership interest to the trustee, plus updated member records and, if required, the other members’ consent. Your attorney should prepare it and check your operating agreement first.
What are the disadvantages of putting an LLC in a trust?
Mostly paperwork: the assignment, consents, and making sure lenders and licenses are handled. For S corporations there are trust eligibility rules to follow. A revocable trust doesn’t protect assets from creditors or reduce estate tax.
Make sure your plan actually owns your business
A 30-minute video call with Morrowgate Private Wealth’s Greg Garone, CEPA®, wherever you are in the U.S. We’ll check how your business is titled and whether it matches your trust, then work with your attorney on anything that doesn’t line up.
Go deeper on WealthPlannerPro: Federal estate tax calculator · ILIT calculator