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If you own an LLC and a revocable living trust, the two should almost certainly be connected. An LLC held in your name alone will pass through probate when you die, which is slow, public, and avoidable. It also creates a gap during incapacity: if you become unable to manage your affairs, someone will need court authority to step in, unless a successor trustee already has that power through the trust. Transferring your LLC interest into your revocable trust closes both gaps. The business continues without interruption. Your estate avoids probate. The transition happens privately and on your terms.

The transfer itself is not complicated. What complicates it is failing to account for what your operating agreement, your state, and your other contracts require before you sign anything.

Your operating agreement governs how ownership can be transferred, and it is the first document to review. Some agreements include language that explicitly permits transfers to revocable trusts, which makes the process straightforward. Others are silent on the issue, restrict transfers entirely, or require member approval before any ownership change can take effect.

In a single-member LLC, you have no partners to consult, and most states allow a trust to serve as the sole member. Your main task is confirming that your agreement does not contain language that would make the transfer invalid, and amending it if it does. In a multi-member LLC, the picture is more complex. Most agreements require majority or unanimous consent from the other members before any interest can be transferred, and some include rights of first refusal that would need to be addressed. Have a direct conversation with your partners before proceeding and get any approvals in writing.

If your LLC has no operating agreement, state default rules apply, and those rules can be stricter than you expect. In many states, a transfer in a multi-member LLC without an operating agreement requires unanimous consent of all members. This is worth resolving before the transfer rather than after.

If you do not yet have an operating agreement for your LLC and need help getting started, read our prior article: Your LLC Is Missing Its Most Important Document.

Before you assign your LLC interest to your trust, review the trust document itself. It should authorize the trustee to hold and manage business interests, name a successor trustee who is capable of actually running or overseeing an LLC, and be consistent with your operating agreement on matters like voting and management rights. If the trust was drafted years ago for simpler assets, it may need to be updated before it is appropriate for a business interest. Your estate planning attorney can confirm whether the language is sufficient.

If your LLC holds government contracts or carries a small business certification, the transfer requires additional care. The SBA has specific rules about what structures qualify as owner-controlled, and a revocable trust can satisfy those rules, but only if it is structured correctly.

For Service-Disabled Veteran-Owned Small Business certification, for example, federal regulations under 13 C.F.R. Part 128 permits ownership through a revocable trust, but only when the qualifying veteran is simultaneously the grantor, the trustee, and the current beneficiary of that trust. If those three roles are not all held by the veteran at the time of transfer, the certification is at risk. The same general principle applies to other SBA programs, including the 8(a) and WOSB programs, though the specific requirements vary. Do not assume that a properly formed revocable trust is automatically compliant. Check the regulations that apply to your certification and involve a government contracts attorney if there is any uncertainty.

Commercial contracts, loan agreements, and leases may also contain change-of-control provisions that require notice or consent before ownership changes hands. Review any material contracts before completing the transfer, and notify counterparties where required.

Once you have cleared the operating agreement, confirmed your trust is ready, and addressed any contract or certification issues, the transfer itself follows a predictable sequence. You will need a written assignment of membership interest, signed by you as assignor and by the trustee as assignee. The document should state the percentage being transferred, the effective date, and the consideration (a nominal amount is typical for estate planning transfers). If other members are involved, their written consent should accompany the assignment.

Update the operating agreement to reflect the trust as the new member. Amend your Articles of Organization with the state if required. States vary on this: some require amended filings when membership changes, others do not, and a handful impose specific thresholds before a filing is triggered. Update your membership ledger, notify your bank, and inform any other parties who rely on knowing who owns the LLC. Keep the resolution, assignment, and updated documents together in a single file.

For tax purposes, transferring an LLC interest to a revocable trust is generally treated as a non-event. The IRS treats a revocable trust as a disregarded entity, so income and losses continue to flow through to you on your personal return as they did before. The tax treatment changes if the trust ever becomes irrevocable, but that is a separate question.

The transfer is most straightforward when you do it in a period of normal business and clear thinking. Attempting it after a health event, under time pressure, or in the middle of a dispute is harder on every dimension.

Review your documents, involve your estate planning attorney and tax advisor, and if you hold government contracts or SBA certifications, bring those specialists in early. 

Your business took years to build. The transfer that protects it from probate and ensures it reaches the right hands typically takes very little effort if done correctly.

This article is for informational purposes only and does not constitute legal or tax advice. LLC transfer requirements vary by state, and government contract and SBA certification rules involve specific regulatory requirements. Consult qualified legal and tax professionals before making any ownership changes.

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