Can I merge an existing LLC into a new revocable trust? – North Carolina

Short Answer

In North Carolina, you don’t merge an LLC into a revocable trust; instead, you transfer your ownership interest in the LLC to the trustee of your trust. The LLC stays a separate company. You typically assign your membership interest to the trustee, update the LLC’s records, and follow any transfer or consent rules in the operating agreement and the North Carolina LLC Act. If you are both settlor and trustee, you usually keep day-to-day control as manager or member per the LLC’s documents.

Understanding the Problem

You own a North Carolina LLC and want to set up a revocable trust as part of your estate plan. Can you place the company into the trust? The decision point is whether the law allows you to move your LLC ownership into a North Carolina revocable trust so the trust—not you individually—holds the membership interest.

Apply the Law

Under North Carolina law, a revocable trust can own property, including intangible personal property like an LLC membership interest. Funding a trust with an LLC is done by transferring (assigning) the membership interest to the trustee, not by merging the entities. The trust instrument and trustee powers govern the trustee’s authority, and third parties may rely on a certification of trust. The LLC’s operating agreement and the LLC statute control whether a transfer requires consent, what rights transfer automatically, and how a new owner (including a trustee) is admitted as a member.

Key Requirements

• Have a valid revocable trust and trustee: Your trust should be properly executed, name a current trustee, and allow additions of property.
• Follow the LLC’s operating agreement: Review any transfer restrictions, required consents, and admission procedures for a new member (the trustee).
• Use a written assignment: Execute an Assignment of LLC Membership Interest to the trustee and have the trustee accept it.
• Update company records: Amend the membership ledger and, if needed, the operating agreement and banking/signatory documents; provide a certification of trust.
• Confirm control and tax status: If you manage the LLC, confirm management remains as intended; if the LLC is taxed as an S corporation, ensure the trust is a permitted shareholder before transferring.

What the Statutes Say

• N.C. Gen. Stat. § 36C-10-1013 (Certification of trust) – Lets trustees prove authority without disclosing full trust terms.
• N.C. Gen. Stat. § 36C-10-1012 (Protection of persons dealing with trustee) – Protects third parties who rely in good faith on a trustee’s authority.
• N.C. Gen. Stat. § 36C-6-602 (Revocation or amendment of revocable trust) – Confirms settlor control over a revocable trust and adding/removing property.

Analysis

Apply the Rule to the Facts: Because you’re forming a North Carolina revocable trust and already own an LLC, you would assign your membership interest to your trustee rather than “merge” the company into the trust. Before signing, review your operating agreement for any transfer restrictions or consent requirements; if consent is required, get it and document it. After assignment, update the LLC’s records and let banks or counterparties review a certification of trust if they need proof of trustee authority.

Process & Timing

1. Who files: The LLC member (you) and the trustee. Where: With the LLC (update the company’s records; no court filing). What: Trust agreement, Certification of Trust, Assignment of LLC Membership Interest, and any required member/manager consents. When: Complete before the LLC issues new distributions or executes new agreements in the trustee’s name.
2. Obtain any required consents under the operating agreement; the LLC updates its membership ledger and, if needed, amends the operating agreement and banking/signatory documents. Third parties can rely on the certification of trust.
3. Confirm tax and management details (e.g., S-corp eligibility if applicable; manager/member roles). Keep the signed assignment with company records and the trust’s fiduciary file.

Exceptions & Pitfalls

• Operating agreement restrictions: If you transfer without required consents, the trustee may get only economic rights until admitted as a member.
• Professional or regulated practices: Some professional LLCs limit who may own interests; additional licensing rules may apply.
• Lender or contract covenants: Credit agreements and vendor contracts may require consent before ownership changes.
• S-corp tax status: If the LLC is taxed as an S corporation, only certain trusts may qualify as shareholders; get tax advice before transferring.
• Signature authority: Update bank signature cards and internal resolutions so the trustee can act; use a certification of trust to avoid disclosing the full trust.

Talk to a Estate Planning Attorney

If you’re dealing with transferring an LLC into a new revocable trust, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.