Short Answer

In North Carolina, a trust generally can own a business, but the cleaner approach is usually to keep the business entity (LLC or corporation) separate and transfer the ownership interest (membership interest or shares) into the trust. That approach helps preserve liability protection, keeps contracts and licenses in the entity’s name, and avoids unintentionally “retitling” operating assets. The best choice depends on the entity type, the governing documents, and whether any lender, co-owner, or contract requires consent before an ownership transfer.

Understanding the Problem

In North Carolina estate planning, the question is whether a new business should be placed “into” a trust or whether the business should stay in its own entity while the trust holds the ownership interest. The key decision point is what is being transferred: the business’s operating assets and contracts versus the equity interest in the business entity. The answer often turns on the entity’s formation structure (LLC or corporation), who will control the business after the transfer, and what approvals the entity’s documents require before any ownership change.

Apply the Law

North Carolina law generally allows a trust to hold property, including ownership interests in business entities, as part of an estate plan. In practice, most estate plans treat the business interest like any other asset: the trust becomes the owner of the membership interest or shares, while the business itself continues to operate as a separate legal entity. Keeping the entity separate matters because the entity is the “container” that holds contracts, bank accounts, licenses, employees, and liability exposure; the trust is typically the “owner” of that container.

Key Requirements

• Transferability under the entity’s documents: The operating agreement, bylaws, shareholder agreement, or buy-sell agreement may restrict transfers, require notice, or require consent before a trust can become an owner.
• Proper titling and authority: The transfer should clearly identify the trust and the trustee’s capacity (for example, “as trustee”) to reduce confusion about who can sign and vote for the business interest.
• Separation of entity vs. assets: A transfer of an ownership interest is different from transferring the business’s equipment, contracts, or real estate into the trust; mixing these can create operational and liability problems.

What the Statutes Say

• N.C. Gen. Stat. a7 39-45 (Business trusts; authority to hold property) – Recognizes that a trust-type business arrangement may acquire and hold real estate and sue or be sued in its trust name.
• N.C. Gen. Stat. a7 39-46 (Business trusts; conveyance of property) – Addresses how certain trust entities may convey or encumber property and how authority can be shown for recording purposes.

Analysis

Apply the Rule to the Facts: With no specific business facts provided, a neutral example helps show the difference. If a new North Carolina LLC is formed to run operations, keeping the LLC as the operating entity and transferring the membership interest to a revocable trust typically keeps vendor contracts, bank accounts, and liability inside the LLC while letting the trust control who inherits the ownership. If instead the business’s operating assets are moved out of the LLC and titled directly to the trust, the business may lose the practical benefit of having a single operating “container,” and third parties may require re-papering contracts and accounts.

Process & Timing

1. Who files: Usually the current owner(s) of the business interest and the trustee (or future trustee) as transferee. Where: Typically no court filing; updates happen in the entity’s internal records (company records book, membership ledger, stock ledger). What: An assignment of LLC membership interest or stock assignment, plus any required consents under the operating agreement/shareholder agreement. When: Before incapacity or death planning is needed; if there are lender or co-owner consent rights, obtain consent before signing the transfer.
2. Update control documents: amend the operating agreement, bylaws, or shareholder records to reflect the trust as owner and clarify voting/management rights, including who can act for the trust (the trustee) and whether a successor trustee can step in without business disruption.
3. Confirm practical follow-through: notify the accountant and attorney as needed (without seeking tax advice here), update signature cards only if the trust will own the entity, and confirm any contract clauses triggered by an ownership transfer (for example, “change of control” provisions).

Exceptions & Pitfalls

• Transfer restrictions and consent requirements: Many LLC operating agreements and shareholder agreements limit transfers to trusts or require the other owners’ written approval. Ignoring these terms can trigger dispute rights or forced buyout provisions.
• Confusing “putting the business in a trust” with transferring assets: Transferring the ownership interest is usually straightforward; transferring operating assets (vehicles, equipment, IP, contracts, and real estate) can require separate assignments, lender approvals, and re-titling—sometimes breaking clean separation between the business and the trust.
• Authority and signing capacity: Banks and counterparties often want proof that the trustee can act. If documents do not clearly show “trustee” capacity, third parties may refuse to accept signatures or may treat the transaction as personal.
• Liability and governance mismatch: A trust may own the equity, but managers/officers still run day-to-day operations. If the estate plan names a trustee who is not prepared to oversee a business interest, conflicts can arise between business governance and fiduciary duties.

Conclusion

In North Carolina, a trust can generally own a business, but most estate plans work best when the business stays in its own LLC or corporation and the trust receives the membership interest or shares. That structure keeps the operating “container” intact while aligning ownership with the estate plan. The most important next step is to review the entity’s operating agreement or shareholder documents and then sign a written assignment transferring the ownership interest to the trust only after any required consents are obtained.

Talk to a Estate Planning Attorney

If you’re dealing with how to align a new business with a North Carolina trust-based estate plan without creating contract, governance, or transfer problems, 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.