To assign an LLC to a trust, you sign a short legal document called an Assignment of Membership Interest that transfers your ownership from you personally to your trust, then update the LLC’s internal records and any state filings that show who owns the company. Before you sign, three documents need review: the LLC’s operating agreement, the trust agreement, and any loan or financing paperwork tied to the business. Most people complete this transfer using a revocable living trust, which keeps things simple and creates no tax consequences while you’re alive.
Check These Three Documents First
Skipping this step is how transfers get invalidated, loans get accelerated, and business partners get angry. Read all three before you draft anything.
Your Operating Agreement
The operating agreement controls how membership interests can be transferred. Many agreements require written consent from the other members before a transfer goes through. Some restrict who can receive an interest or impose a right of first refusal. Ignoring those provisions can invalidate the transfer entirely.
There’s also a distinction most owners miss. In most states, assigning your membership interest to a trust transfers only your economic rights, meaning the right to receive distributions and profits. The trust does not automatically become a full member with voting and management rights unless the operating agreement allows it and the other members consent to admitting the trust as a member. If your operating agreement doesn’t address this, amend it so the trust’s role is clear.
Your Trust Agreement
Confirm the trust actually authorizes the trustee to hold and manage business interests. Most well-drafted revocable trusts include this authority; older or simpler documents sometimes don’t. You’ll also need the trust’s exact legal name as it appears in the trust document, along with the full legal name of the acting trustee. Something like “The Jane Doe Revocable Living Trust, dated March 15, 2024.” Getting any of these details wrong on the assignment creates problems later.
Loan and Financing Agreements
This is the step people skip most often, and it can cause the most immediate damage. If the LLC has outstanding loans, lines of credit, or guarantees, those documents almost certainly restrict ownership changes. A lender can treat the transfer as a default if the loan requires prior written consent before any change in ownership, even a transfer to your own revocable trust.
Review every loan document and guarantee for “change in ownership” or “transfer” clauses. If consent is required, get it in writing before you sign the assignment. If the loan only requires notice within a certain number of days after the change, calendar that deadline. A lender that isn’t handled properly can accelerate the entire loan balance.
What Goes in the Assignment of Membership Interest
The Assignment of Membership Interest is the core legal document that makes the transfer happen. It doesn’t need to be long, but it does need to be precise.
The document identifies two parties: the assignor (you, the current member) and the assignee (the trust, identified by its full legal name and the name of the trustee). It must state the exact percentage of membership interest being transferred and the effective date. If you own 100% of the LLC, you’re transferring 100%. If you co-own the LLC and are only transferring your share, specify that percentage exactly as it appears in the operating agreement. The effective date matters because it fixes when the trust’s rights begin and when your individual ownership ends.
Many assignments include recitals, which are background paragraphs identifying the LLC by its full legal name and state of formation, referencing the operating agreement, and confirming that the transfer complies with any required consent provisions. Recitals aren’t strictly required in every state, but they make the document self-explanatory to anyone who reads it later, including banks, title companies, and courts.
Signing and Notarizing
Both parties should sign. You sign as the assignor in your individual capacity, and someone signs on behalf of the trust as trustee. In many revocable trusts you’re both the grantor and the trustee, which means you sign twice, once to give the interest away and once to accept it into the trust. That’s normal.
Get the signatures notarized. Not every state requires notarization for this document, but a notary’s stamp is independent verification that the signers are who they say they are and signed willingly. If the transfer is ever challenged by a business partner, a creditor, or during estate administration, a notarized assignment is significantly harder to dispute.
Update Records and Notify Third Parties
A signed assignment sitting in a drawer doesn’t finish the job. Several administrative steps need to happen promptly.
Update the LLC’s membership ledger to remove your name as an individual member and add the trust under its full legal name. If the operating agreement needs to be amended to reflect the new ownership structure, draft the amendment and have all members sign it. For a single-member LLC that’s straightforward. For a multi-member LLC, the other members’ signatures are typically required.
Notify the LLC’s bank and update the account signature cards so the trustee has proper authority over the accounts. If you’re both the individual owner and the trustee, the practical change may be minimal, but the bank still needs the paperwork. Provide a copy of the assignment and, if requested, a certificate of trust or the relevant pages of the trust document showing the trustee’s authority.
If the LLC holds professional licenses, permits, insurance policies, or contracts with assignment clauses, review each one. Some contracts require notice of an ownership change, and some insurance policies need to be re-issued or endorsed to reflect the new ownership.
State Filing Requirements
Whether you need to file anything with the state depends on what your state puts in its LLC records. Some states require member or manager names in the articles of organization or in annual reports, so an ownership change means filing an amendment or update. Other states don’t require member information in any public filing, and the transfer is purely internal. In Texas, for example, there’s no filing requirement with the secretary of state for an LLC ownership change.
Check your state’s rules to see whether member information appears in any public document. If it does, file the necessary amendment after the transfer is complete. Fees are generally modest but vary by state.
Tax Consequences During Your Lifetime
Transferring your LLC interest to a revocable trust has no immediate tax consequences. The grantor of a revocable trust is treated as the owner of the trust assets for federal income tax purposes, so the LLC’s income, deductions, and credits continue to flow through to your personal tax return exactly as they did before the transfer.
A single-member LLC owned by a revocable trust remains a disregarded entity for federal tax purposes. A multi-member LLC taxed as a partnership continues to file its partnership return and issue you a K-1. The transfer doesn’t change the LLC’s tax classification, and the LLC keeps its existing EIN. After your death, the trust will need its own EIN.
At death, the LLC’s assets receive a step-up in basis to fair market value as of the date of death, because the revocable trust assets are included in your gross estate. That can dramatically reduce capital gains taxes if the trust beneficiaries later sell the assets.
A transfer to an irrevocable trust is a different situation entirely. The IRS treats it as a completed gift, which triggers gift tax reporting on Form 709 and may consume part of your lifetime gift and estate tax exemption. The trust also becomes a separate taxpayer with its own compressed tax brackets. If you’re considering an irrevocable trust, work with an estate planning attorney and a tax advisor before signing anything.
If the LLC Owns Real Estate With a Mortgage
Transferring an LLC interest usually doesn’t touch the deed to the underlying property, but mortgage lenders still care about ownership changes. For residential property with fewer than five dwelling units, the Garn-St. Germain Act prohibits lenders from calling the loan due when you transfer into a living trust in which you remain a beneficiary and the transfer doesn’t change who occupies the property. That statutory protection overrides contrary language in your mortgage documents.
The protection has limits. Commercial real estate, apartment buildings with five or more units, and mixed-use properties don’t qualify. For those, check your loan documents and get lender consent before the transfer.
Real estate LLCs may also need an updated deed or a memorandum of the transfer recorded with the county, depending on state rules. Some states impose transfer taxes on real property conveyances, though most exempt transfers to revocable trusts. Confirm the local rules before assuming the transfer is free of recording fees or taxes.
FinCEN Beneficial Ownership Reporting
You don’t have to file a Beneficial Ownership Information report with FinCEN because of this transfer, at least under the current rules. As of March 2025, FinCEN revised its rules to exempt all domestic companies from BOI reporting under the Corporate Transparency Act. Only entities formed under foreign law that have registered to do business in a U.S. state or tribal jurisdiction are currently required to file.
That exemption came through an interim final rule and could change. If your LLC is a domestic entity, there’s nothing to file with FinCEN related to this transfer right now. Watch for any final rulemaking that restores domestic reporting requirements.