If my trust owns the LLC, do I need to retitle new properties the LLC buys later, or are they automatically covered? – North Carolina

Short Answer

In North Carolina, if a revocable trust owns the LLC membership interest, the LLC—not the trust—owns any real estate the LLC buys. New properties titled directly to the LLC are automatically part of the LLC and, indirectly, part of the trust’s value through that membership interest. No retitling to the trust is needed. If property is purchased in an individual’s name, a deed to the LLC is needed to bring it under the LLC (and thus under the trust’s indirect ownership).

Understanding the Problem

In North Carolina estate planning, when a revocable trust holds a membership interest in an LLC that acquires real estate, the key decision point is: must future LLC purchases be retitled into the trust, or does titling them in the LLC’s name already achieve the intended estate and liability structure? This question centers on who holds title (LLC versus trust), the trustee’s authority over the LLC interest, and how timing of purchases and transfers affects the plan.

Apply the Law

Under North Carolina law, an LLC is a separate legal entity. The trust can own the LLC membership interest, while the LLC owns its assets. The trustee’s duties include taking control of trust property (the membership interest), keeping clear records, and exercising powers to manage that business interest. Real property intended to be within the LLC’s liability shield must be titled to the LLC and recorded in the county’s Register of Deeds; membership transfers are documented in the LLC’s records. The main forum for routine trust administration is non-court; Clerk of Superior Court involvement typically arises only if a trust proceeding is filed.

Key Requirements

• Title in the right name: Deeds for operating or investment property should name the LLC as grantee; do not deed those properties to the trust if the goal is LLC ownership.
• Fund the trust with the LLC interest: Assign the LLC membership interest to the trustee so the trust, not the individual, is the member.
• Trustee authority and records: Ensure the trustee has authority to manage the LLC interest and keep records showing the trust’s ownership; keep trust and LLC assets separate.
• Operating agreement compliance: Follow any consent, transfer, or rights-of-first-refusal terms before assigning membership interests.
• Recording and notice: Record real estate deeds in the county where the property is located and update insurance, banking, and lease documents to match the titled owner (the LLC).

What the Statutes Say

• N.C. Gen. Stat. § 36C-8-816 (Trustee powers) – Trustees may exercise powers over securities and business interests similar to an absolute owner, subject to trust terms.
• N.C. Gen. Stat. § 36C-8-809 (Take control of trust property) – Trustee must take reasonable steps to control and protect trust property (here, the LLC interest).
• N.C. Gen. Stat. § 36C-8-810 (Recordkeeping; segregation) – Trustee must keep adequate records and keep trust property separate.
• N.C. Gen. Stat. § 36C-2-203 (Trust proceedings; jurisdiction) – Identifies when the Clerk of Superior Court handles trust administration disputes.

Analysis

Apply the Rule to the Facts: Because the revocable trust owns the LLC membership interest, any property the LLC later purchases is owned by the LLC without further retitling. This satisfies the “title in the right name” element and keeps the liability shield aligned with ownership. The trustee’s duties are met by documenting the assignment of the LLC interest to the trust and keeping trust/LLC records separate. If any real estate is still titled to an individual, a recorded deed to the LLC is needed to align with the plan.

Process & Timing

1. Who files: No court filing is required for routine funding. Where: For real estate, record deeds at the county Register of Deeds where the property sits. LLC ownership changes are reflected in LLC records. What: Execute an Assignment of LLC Membership Interest to the trustee and update the LLC operating agreement/membership ledger; use a North Carolina deed to transfer any individually held property to the LLC. When: Complete the assignment when the trust is established and record any deeds promptly.
2. Update banking, insurance, and leases to show the LLC as owner/insured/landlord. Obtain member/manager consents if the operating agreement requires them. Timeframes vary by institution; many updates can be completed within days to a few weeks.
3. For future purchases, have the purchase contract and deed name the LLC as buyer/grantee. Maintain trust records showing continued ownership of the LLC interest. Outcome: the trust indirectly owns the LLC’s assets through the membership interest.

Exceptions & Pitfalls

• Titling mistakes: Deeding new properties to the trust instead of the LLC can undercut the liability plan; title acquisitions in the LLC’s name.
• Operating agreement restrictions: Some LLCs require consent or impose transfer limits on membership assignments; follow those terms before assigning interests to the trust.
• Lender and lease covenants: Mortgages or commercial leases may restrict transfers or require notices; coordinate before retitling existing properties to the LLC.
• Insurance mismatches: Ensure policies list the LLC as named insured for LLC-owned properties; keep trust and LLC assets and accounts separate.
• Tax treatment confusion: A single‑member LLC may be disregarded for tax purposes but remains a separate legal owner for titling and liability.

Talk to a Estate Planning Attorney

If you’re dealing with how a trust and LLC should hold existing and future real estate, 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.