Nov72025
Estate Planning Q&A Series

How can I set up a trust to hold my LLC membership interests? – North Carolina

Short Answer

In North Carolina, you can place your LLC membership interests into a revocable living trust by creating the trust and then assigning your LLC interest to the trustee, but you must follow your LLC’s operating agreement and any consent or transfer restrictions. The trust remains private and is not filed with the court. Proper paperwork, recordkeeping, and trustee powers language are essential to preserve membership rights and avoid unintended consequences.

Understanding the Problem

You want to know whether you can use a North Carolina revocable living trust to hold your LLC membership interests, and how to do it correctly. The decision point is: can you transfer your LLC interest to a trust and keep the rights you expect while complying with your operating agreement? You own an LLC and other assets you want to combine in one trust for estate planning.

Apply the Law

Under North Carolina law, a revocable living trust is a private arrangement where a trustee holds legal title to property for beneficiaries. You create the trust, then “fund” it by transferring assets, including LLC membership interests, into the trustee’s name. Trustees have broad statutory powers to manage trust assets, but must act prudently, keep trust property separate, and provide beneficiaries with information as required. Transferring an LLC interest to a trust is allowed if the LLC’s governing documents permit it; many operating agreements limit transfers or distinguish between an assignee (economic rights) and a member (voting/management rights).

Key Requirements

  • Create a valid trust: Sign a revocable trust agreement naming a trustee and beneficiaries, and give the trustee powers to hold and manage closely held business interests.
  • Follow the operating agreement: Review and comply with any transfer restrictions, rights of first refusal, or consent/admission requirements before assigning your membership interest.
  • Assign the interest properly: Execute a written Assignment of LLC Membership Interest to the trustee and obtain any required member/manager consents; update the company’s ownership ledger.
  • Keep it private but verifiable: Use a Certification of Trust when third parties need proof of trustee authority instead of providing the entire trust.
  • Observe trustee duties: The trustee must keep trust assets separate, maintain records, manage prudently, and avoid conflicts—especially if the trustee also manages the LLC.
  • Know the limits of protection: A revocable trust does not shield assets from your personal creditors during your lifetime and, after death, may be reachable for valid claims.

What the Statutes Say

Analysis

Apply the Rule to the Facts: You can set up a North Carolina revocable trust and include powers for the trustee to own and manage closely held business interests. Because you want the trust to hold your LLC interest, you must first check your operating agreement and get any required consents so the trustee is recognized as a member, not just an assignee with economic rights. After that, you sign an assignment transferring your membership interest to the trustee, and the LLC updates its records. The trustee then keeps separate trust books, uses a Certification of Trust for routine requests, and manages the interest prudently for your beneficiaries.

Process & Timing

  1. Who files: You (the settlor). Where: Private signing; no routine court filing. What: Revocable Living Trust Agreement, pour-over will, and a Certification of Trust. When: Before any incapacity or major business changes to ensure smooth admission of the trustee as member.
  2. Transfer your LLC interest: Review the operating agreement; obtain written member/manager consent if required; execute an Assignment of LLC Membership Interest to the trustee; have the LLC update its ownership ledger and minutes. Some agreements require advance notice or consent—timing can vary by company.
  3. Finalize and maintain: Retitle other assets to the trust as desired; the trustee keeps trust property separate, maintains records, and uses a Certification of Trust when institutions need proof of authority. Consider optional court validation of the revocable trust if you want to reduce the risk of later challenges.

Exceptions & Pitfalls

  • Transfer restrictions: If you skip required consents, the trust may be only an assignee (economic rights) and lose voting/management rights.
  • Professional entities: Certain professional LLCs restrict who may own interests; trusts may not qualify without specific terms or approvals.
  • Tax elections: If your LLC is taxed as an S corporation, using a trust can trigger special federal trust rules; coordinate with tax counsel before transferring.
  • Creditor exposure: A revocable trust does not protect assets from your creditors during life and may be reachable for valid claims after death.
  • Trustee conflicts: If the trustee is also the LLC manager, document decisions, avoid self-dealing, and follow the duty of loyalty and prudent administration.
  • Recordkeeping: Keep trust property titled to the trustee and maintain clear records so banks and counterparties recognize the trust’s ownership.

Conclusion

In North Carolina, you can hold your LLC membership interest in a revocable living trust by creating the trust, following any transfer limits in your operating agreement, and assigning the interest to the trustee. Include trustee powers for closely held business interests, use a Certification of Trust for third parties, and keep trust assets and records separate. The next step is to sign a revocable trust and, after obtaining any required consents, execute an Assignment of LLC Membership Interest to the trustee.

Talk to a Estate Planning Attorney

If you’re dealing with transferring your LLC interest into a revocable trust and want to avoid consent and membership pitfalls, 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.

Category: Estate Planning Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.