Can a Trust Own an LLC in Illinois?

Yes. Illinois law does not prohibit trusts from owning and serving as members of limited liability companies. A trust can be the sole member or co-member of an LLC. The trustee acts on the trust's behalf in LLC matters. No special approval or registration requirements apply under the Illinois Limited Liability Company Act (805 ILCS 180/).

How Trust Ownership Works

The trust itself holds the LLC membership interest. The trustee signs formation documents and exercises member rights—voting on decisions, receiving distributions, and managing the LLC—on behalf of the trust beneficiaries. Illinois law imposes no restrictions on trust membership (805 ILCS 180/15-5).

When forming an LLC with a trust as member, name the trust on the Articles of Organization filed with the Illinois Secretary of State. The trust becomes the legal owner, not the individual beneficiaries.

Operating Agreement Essentials

While Illinois does not require a written operating agreement (805 ILCS 180/15-5), one is strongly recommended when a trust is a member. The agreement should specify:

• How the trustee votes on LLC matters
• Distribution rights and timing to the trust
• Successor trustee procedures upon resignation or death
• Whether the trustee can transfer the membership interest

Without an agreement, Illinois statutory defaults govern member relations.

Trustee Authority and Succession

Before forming or transferring an LLC into trust ownership, confirm the trust document authorizes the trustee to own business interests. Upon the trustee's removal or resignation, the successor trustee automatically assumes the membership interest and voting rights. No LLC amendment is required unless the operating agreement mandates member consent for trustee changes.

Liability and Tax Considerations

Trust ownership does not alter the LLC's standard liability protection. Creditors of the trust generally cannot reach LLC assets directly, though trust creditors may pursue trust distributions.

Trust-owned LLCs may be taxed as partnerships, S-corporations, or disregarded entities depending on whether the trust is revocable or irrevocable and IRS elections. Consult a tax advisor on the appropriate classification.

Next Steps

1. Confirm the trust document authorizes business ownership
2. Draft or review an operating agreement addressing trustee authority and succession
3. File Articles of Organization with the Illinois Secretary of State, naming the trust as member
4. Obtain an EIN from the IRS
5. Consult a tax professional on entity classification

Relevant Statute: 805 ILCS 180 (Illinois Limited Liability Company Act)

This is general information, not legal advice.