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August 25, 2021

Should I transfer my LLC ownership to my Trust?

When possible, titling your LLC in your Trust’s name can have advantages.

If you have an LLC in Missouri, frequently transferring your ownership interest to your Trust is the best way to transfer LLC assets to your heirs upon your death. (While still shielding your personal assets from any business liabilities incurred by the LLC).

Ideally, your membership interest will be titled directly to your Trust (e.g. “The John Doe Living Trust, dated January 1, 2021) or in your name as Trustee of your Trust (e.g. “John Doe, Trustee(s), or their successor(s), under The John Doe Living Trust, dated January 1, 2021”).

However, this process can be complicated and, in some instances, inadvisable.

An LLC’s Operating Agreement or other organizational documents may prohibit Trusts from owning a membership interest or may prohibit the transfer of your ownership interest altogether. Retitling your ownership interest under such circumstances could result in a variety of adverse consequences (e.g. triggering a purchase option by other owners).

Accordingly, always have an attorney review your organizational documents prior to retitling any ownership interest.

This article represents the opinion of the author and is intended for educational purposes. This article does not constitute legal advice, nor does it create an attorney-client relationship. One should always consult with an experienced attorney before making estate planning decisions.

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