Blog Post

Should your revocable trust own your LLC?

Ryan Scharber • November 15, 2023

An LLC interest held outside of a trust is considered personal property and subject to probate upon the owner's death.

Ryan Scharber

If a trust is part of your estate plan, it is probably your intention that the trust would own all of your major personal property so as to avoid the pain, cost and delays of probate. With a properly funded trust (see our October 2023 article), avoiding probate is a reasonable expectation.


However, it’s not uncommon for some trust makers to overlook one important asset: their ownership interest in a limited liability company (LLC).


In Arizona and most other states, an LLC ownership stake is considered personal property. As a consequence, if at the time of your death you personally own all or part of an LLC – i.e., you did not convey your LLC ownership to your trust – the transfer of your ownership would probably have to go through probate.

You can spare your successor trustee that pain, and spare your estate the cost of probate, by transferring your LLC interests to your trust. Doing so can help you achieve your major estate planning objectives and pave the way for a smooth and hassle-free transition of your LLC to your beneficiaries.


Here are common steps for conveying your LLC ownership to your trust:


  • Be sure that your LLC’s operating agreement allows you to transfer your interest to a trust. If it does not, you will need to amend it, though most operating agreements include exceptions that allow for the transfer of membership interests to revocable trusts for estate planning purposes.
  • If your operating agreement sets forth any specific requirements for transferring your interest, follow them.
  • If your LLC ownership predates the creation of your trust, your trust agreement should include an “assignment of interest” from you to the trust.
  • Conveying your LLC ownership to your trust might require you to amend your Articles of Organization and/or other records on file with the Arizona Corporation Commission or the appropriate governing agency in your state.
  • If you form the LLC or acquire an LLC interest after you set up your trust, your trust should be named as the owner of your membership interests ab initio ("from the beginning").

If your interest is in a multi-member LLC, your transfer may need to be approved by the other members, particularly if your operating agreement has any restrictions regarding transfers of ownership. Approval might be in the form of a signed resolution that acknowledges and accepts the transfer of your LLC interest to your trust.


While acknowledging the advantages (described above) to having a trust-owned LLC, it is important that you carefully evaluate the operating agreement and any buy-sell agreements and transfer restrictions to avoid unforeseen consequences. Working with a knowledgeable attorney can help you navigate this process and make informed decisions for your business.


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