– Authored by: Collin D. Dickey
It can be said that a Trust is only as good as what it holds. This is why it is imperative to consider whether you have assets that may have been left out of your Trust planning and, thus, not held within your Trust. A common asset that is often left out of Trust planning is an LLC. Many of our clients hold LLCs for various business reasons. For example, you may own residential real estate that you rent out to a tenant. You may have created an LLC as the owner of such rental property. If that LLC is left out of your Trust when you pass away, your loved ones may be stuck going through the probate process for that LLC and its assets.
The best way to avoid your LLC and its assets being subjected to the probate process is to transfer the ownership of your LLC to your Trust. This transfer must be accomplished during an LLC owner’s lifetime and while the owner is still competent to make such legal decisions. In the event that the LLC owner cannot accomplish this transfer, power of attorney documents may be used to effectuate the ownership transfer. However, the transfer must be accomplished while the owner’s mental capacity is not in question.
There are steps you should take to make your Trust the owner of your LLC. For instance, if you are in the process of creating an LLC, you should indicate that the Trust is the owner of the LLC in its Articles of Organization. If the LLC is already created, you should amend the Articles of Organization to reflect the Trust as the owner of the LLC. The Trust should also be reflected as the LLC’s owner in the entity’s Operating Agreement. Finally, it is ideal that all members of the LLC have agreed in a signed writing to any amendments changing ownership of the LLC.
Our office can provide guidance regarding Trust planning protections for your LLC. Please contact us today to schedule a consultation and review of your Trust and LLC documents.
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