In a recent legal update, Texas attorney Nate Gilbert shed light on new guidance from the Texas Secretary of State regarding the management of Limited Liability Companies (LLCs). This development has significant implications for business owners, investors, and estate planners who utilize LLCs in their financial and asset protection strategies.
The Key Change: Trusts Can No Longer Manage LLCs
According to the new guidance, a trust can no longer serve as a manager or managing member of an LLC in Texas. Previously, trusts were commonly used in business structuring and estate planning to maintain control over LLCs. This change impacts individuals who have structured their LLCs with trusts in managerial roles, necessitating a reevaluation of their entity management.
Why Does This Matter?
For those who have used trusts to manage their LLCs, this shift means they will need to appoint individual trustees or other eligible entities as managers instead. Failing to comply with this guidance could lead to legal complications, including potential difficulties with LLC governance, banking relationships, and state compliance.
What Should Business Owners Do?
- Review Your LLC Structure – If your LLC lists a trust as its manager, consult with a legal professional to determine the best course of action.
- Update Operating Agreements – Modify LLC documents to reflect compliant management structures.
- Appoint New Managers – Designate an individual trustee or another legal entity to take on the managerial role.
- Monitor Further Updates – Stay informed on any additional clarifications or changes to state regulations.
Final Thoughts
While this change may create some administrative hurdles, proactive planning can help businesses and estate planners navigate the transition smoothly. Seeking professional legal and financial guidance is crucial to ensuring compliance and maintaining the benefits of LLC structures under Texas law.
For more details on this update, consulting a legal expert is recommended. If you have questions about your LLC’s structure, now is the time to review and adjust accordingly.
Take Action Today
Don’t wait until compliance issues arise—take proactive steps now! Contact an experienced legal professional to assess your LLC structure and make the necessary adjustments. Stay ahead of regulatory changes and safeguard your business’s future. Schedule a consultation today!
Frequently Asked Questions (FAQs)
The Texas Secretary of State updated its guidance to clarify legal responsibilities and ensure proper management structures for LLCs. This change aligns with regulatory compliance and governance best practices.
Yes, a trust can still own an LLC as a member, but it can no longer act as a managing member or manager.
You will need to update your LLC’s management structure by appointing an individual trustee or another eligible entity to serve as the manager.
Consult a legal professional to review your operating agreement and make necessary amendments to comply with the new guidance.
You can visit the Texas Secretary of State’s official website or consult with a business attorney for the latest legal insights and compliance requirements.
