Yes. A trust can own an LLC in Florida. Under Florida state law, an “owner or member” in an LLC can include an “individual, business corporation, nonprofit corporation, partnership, joint venture, limited partnership, limited liability company, limited cooperative association, unincorporated nonprofit association…
Estate, trust, association, public corporation, government or governmental subdivision, agency, or instrumentality, or another legal or commercial entity.” Therefore, a Trust can own or be a member of an LLC in Florida.
What is a Living Trust?
A living trust is a legal framework where assets and property can be held. Have it in mind that trust law permits trustees—who are acting on behalf of trusts, including revocable trusts—to own any asset, or almost any asset, that an individual can own, and this includes an interest in an LLC, which qualifies as an asset.
The trust, which is created by a document, is placed into the ownership of a trustee. The trustee takes control of the assets in the trust and is tasked with distributing them to beneficiaries as the trust directs. Have in mind that the cost of forming a living trust in Florida depends on how you intend to create it.
If you prefer to leverage an online program, it might not cost more than a few hundred dollars. However, a good number of people prefer to work with an experienced attorney. While this route will definitely make the process more convenient, it can be expensive.
Note that the exact cost will depend on the attorney’s fees, but you could end up paying more than $1,000. Therefore, before selecting an attorney to work with, ensure you properly understand the fees they will charge and also note whether the attorney specializes in trusts.
Types of Trust in the State of Florida
There are two types of trusts that can own an LLC in the State of Florida, and each type comes with pros and cons. They include;
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Also referred to as living trusts; these are the most common type of trust and can be easily modified or revoked during the lifetime of the person who created the trust. Have it in mind that using a revocable trust accords you the opportunity to avoid probate, control the LLC, and obtain income from the trust as the beneficiary during your lifetime.
Also note that the trust can be structured in such a way that, upon the creator’s death or incapacity, a new trustee and a new beneficiary (or beneficiaries) will be named. Howbeit, as long as you are still alive and still have control over the trust, the trust assets, including the LLC ownership interests, could be subject to creditor claims.
Note that, unlike revocable trusts, you are not allowed to just make changes or revoke the trust once they have been created. One of the numerous benefits of an irrevocable trust is asset protection. However, this tends to come at the loss of control over the asset.
Note that an irrevocable trust drafted as a domestic asset protection trust will give room for the LLC owners to enjoy both the ownership and control benefits of a revocable trust and the asset protection benefits of an irrevocable trust.
How to Create a Trust to Own an LLC in Florida
Aside from owning an LLC, there are numerous other reasons why you might want to create a Trust in the state of Florida. Outlined below is how you can create trust in the Sunshine State:
1. Choose the type of trust you will need
Have it in mind that single people will need a single trust. If you are married, then you may have to choose between making two separate trusts and forming a joint trust with your spouse. A joint trust is a suitable option if you and your partner have joint property, such as real estate and bank accounts.
2. Take inventory of your property
Before you go ahead to form a trust, you should understand precisely what you own and what you want to include in your trust. Assets you can transfer to a living trust include real estate, cars, savings accounts, family heirlooms, and stocks.
Aside from that, you can also choose to name your trust as the beneficiary of your retirement accounts, such as your 401(k) or IRA. You should also use this time to gather all of the paperwork related to your property, including car titles, home deeds, and certificates of stock ownership.
3. Decide who you will choose as trustee
Ideally, you can name yourself or pick someone else. If you intend to be the trustee, then note that you will also have to select a successor trustee who will assume management of your trust after your death. A successor trustee will also need to ensure that your assets are distributed accordingly to your beneficiaries owing to your trust’s instructions.
4. Create the trust document
After you must have taken care of the above, you will be expected to physically write up the trust document. Note that you can choose to do it yourself by using an internet program or you can leverage the expertise of an attorney.
5. Get the trust document signed
After creating the trust document, the next step will be to sign the trust document in front of a notary public.
6. Fund the trust: At this point, you will have to transfer property into your trust on your own or with the help of an attorney.
If you decide to use a trust to own an LLC in Florida, you must create an operating agreement that defines all the ownership interests in the Trust. Your operating agreement will have to include verbiage that the trustee or successor has the full rights as a manager or member of the LLC and a comprehensive list of each manager and member of the LLC.