Placing a Delaware LLC inside a revocable or irrevocable trust can combine the LLC’s charging-order protection with a trust’s privacy, estate-planning, and tax benefits. Below is a 2025-ready guide to structure a trust-owned Delaware LLC the right way—covering liability shields, federal tax rules, and step-by-step compliance.
Relevant IRC Codes & Definitions
| Code / Section | Why It Matters to a Trust-Owned LLC |
|---|---|
| IRC §671-679 | Grantor-trust rules—income taxed to grantor if trust is revocable or grantor retains certain powers. |
| IRC §641 & §651 | Taxation of non-grantor (complex or simple) trusts; trust files Form 1041. |
| IRC §7701(a)(30)(E) | Defines domestic trusts for U.S. tax purposes (court + control tests). |
| IRC §2036-§2038 | Estate-tax inclusion if trust is revocable or retains incidents of ownership. |
| IRC §1361(b)(1)(C) | Only certain trusts (QSST, ESBT) may own S-Corp stock—important if the LLC later elects S-Corp. |
IRS & State Form References
| Purpose | Form(s) Needed |
|---|---|
| EIN for LLC | SS-4 (trust listed as 100 % owner) |
| Trust’s Tax Return (if non-grantor) | Form 1041 + K-1 to trust beneficiaries |
| LLC’s Return | Schedule C (single-member) or Form 1065 (multi-member) unless LLC elects corporate status |
| BOI Reporting (FinCEN) | Must list both the LLC’s trust owner and the individual trustee(s) / grantor(s) |
| Delaware Annual Tax | Flat $300 for LLC, due 1 Jun 2026 |
Real-World Example
Scenario:
Founders A & B place their 50/50 Delaware SaaS LLC into the A&B Revocable Living Trust for estate planning.
| Before | After Trust Transfer |
|---|---|
| Members: A 50 %, B 50 % | Trust owns 100 % membership units |
| Tax Status | Partnership (Form 1065) |
| Asset Protection | LLC shield only |
No new EIN is needed because ownership change to a disregarded grantor trust is not a technical termination.
Step-by-Step Set-Up Checklist
- Draft or Update the Trust – Ensure Delaware LLC units are scheduled as trust property.
- Prepare LLC Assignment – Sign Membership Interest Assignment to the trust.
- Amend Operating Agreement – Replace members with the trust; name trustee as manager/signatory.
- File BOI Update – Report trust and individual trustees within 30 days.
- Verify EIN Status – No new EIN if it remains a grantor trust; new EIN required if converting to a non-grantor trust.
- Maintain Separate Books – Trust must record K-1 income and distributions.
- Calendar Delaware $300 Fee – Ownership change does not alter state tax obligations.
Conclusion
A Delaware LLC held by a properly drafted trust can:
- Shield business assets from personal lawsuits
- Bypass probate for a smooth founder succession
- Keep ownership private while retaining federal pass-through taxation
But mistakes—like failing to file BOI updates or misunderstanding grantor vs. non-grantor status—can undo the benefits.
Call to Action
Want airtight documents and zero tax surprises when transferring your Delaware LLC into a trust?
👉 Book a trust-LLC structuring call with Anshul Goyal, CPA. We draft assignments, file BOI, and map grantor vs. non-grantor taxation—start-to-finish.
Disclaimer
This material is for educational purposes only and does not constitute legal, tax, or financial advice. Trust taxation differs sharply between grantor, simple, and complex trusts; erroneous classification can trigger double taxation or estate-tax inclusion. Always consult qualified legal counsel and a CPA before transferring LLC interests to any trust.
Anshul Goyal, CPA EA FCA is a U.S.-licensed Certified Public Accountant, admitted before the IRS as an Enrolled Agent, and a Chartered Accountant in India. He assists founders worldwide with Delaware formations, trust planning, BOI compliance, and cross-border tax strategy.
FAQs (Top 5 High-Searched)
1. Will my LLC need a new EIN after transferring to a trust?
No, if it’s a grantor trust; yes, if it becomes a non-grantor trust.
2. Does a trust-owned LLC still pay the $300 Delaware tax?
Yes—the flat LLC fee applies regardless of ownership.
3. Are distributions from the LLC still subject to self-employment tax?
Yes, if the underlying business income is active and passes to grantors.
4. Can a trust-owned LLC elect S-Corp status?
Only if the trust qualifies as a QSST or ESBT under IRC §1361.
5. Do I need to update FinCEN BOI after trust funding?
Yes—report within 30 days or face $500-per-day penalties.
About Our CPA
Anshul Goyal, CPA EA FCA has guided 2,000+ tech founders on entity + trust structuring, saving over $200 million in taxes and ensuring seamless generational transitions.