In 2025, 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. Now, there isn’t really a posted rule on the Secretary of State’s website that states this new guidance plainly, but such is the case for many of the nuances to Texas entity filing rules. Generally speaking, we really only find out about updates like this via rejection when we attempt to file documents.
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. Business owners affected by this change may need to restructure how their LLC is managed. A Texas LLC formation attorney can review your current structure and advise on whether changes are needed.
What Should Business Owners Do?
This is not to say that there are not workarounds to this particular new rule. First, it is important to clarify that the Secretary of State takes this position on Certificates of Formation that are submitted to them for approval. Sounds obvious, but think about what that means. Essentially, they are only reviewing the Certificate of Formation and not your Operating Agreement. Why is that an important distinction?
In a Manager Managed structure for an LLC (or Series LLC) we list the Managers of the company and NOT the owners on the Certificate of Formation we submit. Managers are not necessarily the owners, and in any case, being listed as a Manager on a Certificate of Formation does not itself give you any ownership or Member status. So, we can’t list the Trust as the Manager on the Certificate, but there’s nothing really stopping us from listing the trust as the owner of the LLC on the internal documents of the Company.
One mistake I see as a workaround is attempting to list a Trustee of the trust as the Manager or Managing Member. If you list an individual without their capacity, you’re not listing them as a Trustee, and if you do list them as a Trustee, the Secretary will also reject this attempt.
Which of These Describes You?
Most people reading this are in one of three situations.
You’re forming a new LLC and want your trust to own it. Set it up as manager-managed. The Certificate of Formation names a manager the Secretary of State will accept, and the company agreement makes the trust the member that owns the company. The flat fee is $1,100 for a single-member LLC, or $1,500 for a basic Series LLC, plus the $300 state filing fee.
Your Certificate of Formation was rejected for listing a trust as manager. A rejected filing means the LLC was never formed, so this is a new formation at the same flat fees: $1,100 for a single-member LLC or $1,500 for a basic Series LLC, plus the $300 state filing fee. We refile with a manager the Secretary of State will accept and put the trust’s ownership in the company agreement.
Every formation includes a Management Training Session: a crash course, after filing, in how to run the company you’ve just formed. It’s part of the flat fee, not an add-on.
Frequently Asked Questions (FAQs)
The Secretary of State hasn’t published a rule or an explanation. The change surfaced the way many Texas filing rules do: through rejected Certificates of Formation that listed a trust as manager.
Yes. The Secretary of State’s position concerns who is named as manager on the Certificate of Formation. Ownership is set in the company agreement, and a trust can be the member that owns the LLC.
Filings accepted before the change may still name a trust as manager. A Certificate of Amendment can replace it with an eligible manager, and the company agreement should be updated to match.
It’s amended under its own amendment terms; if it doesn’t address amendments, the Business Organizations Code generally requires the consent of every member. The company agreement isn’t filed with the state.
Nowhere official — the Secretary of State hasn’t published it as a rule. If you’re not sure how it affects your LLC, a free 15-minute consultation is the fastest way to find out.
Get the Structure Right Before You File
If a trust is part of your plan, settle the structure before the Certificate of Formation goes to the Secretary of State. That’s the difference between one filing and a rejection, a refiling, or an amendment later. Book a free 15-minute consultation below and you’ll speak directly with Attorney Nate Gilbert
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