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How to Set Up an LLC With a Trust in California: A Step-by-Step Guide

  • Writer: Linda Varga
    Linda Varga
  • Jul 30
  • 2 min read

How to Set Up an LLC With a Trust

Short Answer: To set up an LLC with a trust, you’ll either (1) create a new LLC with your trust listed as the member or (2) transfer ownership of an existing LLC to your trust via an assignment of interest or membership interest transfer. In either case, you must coordinate with your estate planning attorney and update the LLC's operating agreement and state filings.



Why Set Up an LLC With a Trust?

Holding your LLC in a trust can help:

  • Avoid probate

  • Centralize asset management

  • Protect privacy

  • Ensure a smooth transition of control if you become incapacitated or pass away


This setup is especially useful in estate planning and asset protection strategies.


Step-by-Step Guide to Set Up an LLC With a Trust

1. Confirm Trust Validity

Make sure you have a valid trust in place—usually a revocable living trust. The trust should:

  • Clearly name the trustee(s) and successor(s)

  • Include powers to own and manage business interests


2. Create the LLC or Amend an Existing One


A. If You Are Creating a New LLC:

  • List your trust as the initial member (owner) on the Articles of Organization.

  • Use the full legal name of the trust (e.g., “The Smith Family Trust, dated January 1, 2020”).

  • Provide the trustee’s name and contact info, if required.


B. If You Have an Existing LLC:

  • Prepare an Assignment of Membership Interest or similar transfer document.

  • Update the LLC's Operating Agreement to reflect the trust as a member.

  • Notify the state’s business registry, if required.

  • File an amended Statement of Information (in California).


3. Update Operating Agreement

Your LLC’s Operating Agreement should:

  • Name the trust as the member

  • Reference the trustee’s authority to act on the trust’s behalf

  • Provide guidance for successor trustees


4. Notify Financial Institutions and Partners

Inform banks, business partners, and licensing agencies of the change in ownership to ensure proper authority and continuity. If you create an LLC on mortgaged property, the lender could call the loan in default.


5. Maintain Proper Records

Keep copies of:

  • Trust agreement

  • Assignment of interest

  • Updated Articles of Organization or Statement of Information

  • Operating Agreement


FAQs

Can a Trust Own 100% of an LLC?

Yes, a trust can be the sole member of an LLC.


Do I Need a New EIN?

No, if the trust is revocable and the grantor is alive, the EIN usually remains the same. But consult your tax advisor.


What About Tax Reporting?

In most cases, the LLC remains a pass-through entity. If the trust is revocable, income is reported under the grantor’s Social Security number.


Common Mistakes to Avoid

  • Not updating the LLC's operating agreement after transfer

  • Failing to notify your state business registry

  • Misnaming the trust on public documents

  • Neglecting to include successor trustee provisions

  • Creating an LLC on mortgaged property


Let Us Help You Do It Right

At Moravec, Varga & Mooney, we can ensure your trust and LLC work in harmony to meet your estate planning goals. Whether you’re creating a new LLC or transferring an existing one, our attorneys will walk you through every step.


Contact us today to set up your LLC with a trust and gain peace of mind.


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