If Something Happens To You: Entity and Trust Continuity

The Short Answer

If you own an LLC or a trust and something happens to you, nothing is automatic.

Without a continuity plan:

• Your LLC may be frozen or dissolved
• Your trust may become inaccessible
• Your family may need a court to sort it out
• Your privacy structure may be exposed during probate

The good news: continuity planning is not complicated. It just requires doing a few things in advance.

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What Happens to an LLC When You Die

Single-Member LLC

If you own a single-member LLC and you die:

1. The LLC does not automatically transfer to anyone. Your membership interest passes through your estate.
2. Your operating agreement determines what happens next. If it has no successor provisions, your estate becomes the owner — which means probate.
3. Without a proper handoff, the LLC may be administratively dissolved for failure to file annual reports or pay fees.

Multi-Member LLC

If you own part of a multi-member LLC:

1. Your interest passes to your estate (unless the operating agreement says otherwise).
2. Other members may have right of first refusal to buy out your interest.
3. Your heirs may inherit economic rights but not voting or management rights depending on state law and the operating agreement.

The Problem

Probate is public. If your LLC interest passes through probate, the privacy you built is compromised.

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What Happens to a Trust When You Die

Revocable Trust

If you created a revocable trust and you die:

1. The trust becomes irrevocable (you can no longer change it).
2. The successor trustee you named takes over.
3. Assets inside the trust pass according to the trust terms — no probate required.

This is the main reason people create revocable trusts: to avoid probate and keep asset transfer private.

Irrevocable Trust

If you created an irrevocable trust:

1. You already gave up control. Your death does not change the trust structure.
2. The trustee continues to manage assets according to the trust terms.

The Problem

If you did not name a successor trustee, or if your successor trustee is also dead or incapacitated, the trust may need court intervention to appoint someone.

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What Happens If You Become Incapacitated

Death is not the only risk. Incapacity — stroke, dementia, accident — can freeze your structure just as effectively.

LLC

• If you are the sole manager and you become incapacitated, no one can sign for the LLC unless your operating agreement names a successor manager or grants a power of attorney.
• Banks may freeze accounts. Contracts may not be signed. Operations stop.

Trust

• If you are the sole trustee and you become incapacitated, no one can act on behalf of the trust unless you named a co-trustee or successor trustee.
• A properly drafted trust includes incapacity provisions — but many do not.

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The Fix: A Continuity Plan

A continuity plan ensures your structure survives you (or your incapacity) without court intervention or public exposure.

For an LLC

1. Name a successor manager in your operating agreement. This person can step in if you die or become incapacitated.
2. Consider a transfer-on-death (TOD) provision if your state allows it. Some states let you name a TOD beneficiary for LLC interests.
3. Put your LLC interest into a trust. If your trust owns the LLC, the trust's succession plan controls.

For a Trust

1. Name a successor trustee. This is the most important step. Without one, a court may have to appoint someone.
2. Name a backup successor. People die, move, become unavailable. Have a second option.
3. Create a continuity checklist. Tell your successor where to find the trust, who to contact, and what steps to take.

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The Continuity Checklist

Your successor needs to know:

• Where the signed trust document is stored (physical and digital)
• Where the Certification of Trust is (the document they will show to banks and title companies)
• Who the attorney is (so they can get legal guidance)
• Which accounts and assets are in the trust
• How to access your password manager or secure vault

Do not assume your successor will figure this out. Create a written checklist and give them a copy.

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Common Mistakes

Mistake 1: No Successor Named

The most common continuity failure is simply not naming anyone. If your operating agreement or trust document does not name a successor, a court may have to decide — which defeats the purpose of privacy planning.

Mistake 2: Successor Is Also Dead

If you named a successor 20 years ago and they have since died, you have no valid successor. Review your documents periodically.

Mistake 3: No One Knows Where the Documents Are

A trust is useless if your successor cannot find it. Keep the original in a known location and tell your successor where.

Mistake 4: Successor Does Not Know They Are Named

Inform your successor trustee or manager that they have been named. They should understand the responsibility before they need to act.

Mistake 5: No Continuity Checklist

Even if everything is in place legally, your successor may not know what to do. A written checklist removes ambiguity.

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Trust vs. LLC for Continuity

Issue	Trust	LLC
Passes outside probate?	Yes (if funded properly)	Only if held in trust or TOD available
Requires successor named?	Yes — successor trustee	Yes — successor manager
Court involvement if no successor?	Possible	Possible
Privacy preserved?	Yes (no probate)	Only if held in trust

If you want both privacy and continuity, the cleanest answer is often:

Trust owns LLC. Trust has successor trustee. LLC has successor manager (the trust).

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What To Do Now

1. Check your operating agreement. Does it name a successor manager?
2. Check your trust document. Does it name a successor trustee? A backup?
3. Create a continuity checklist. Where are your documents? Who should your successor contact?
4. Tell your successor. They should know they are named and where to find everything.

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Related Guides

• Trust vs. LLC for Privacy
• Certification of Trust Explained
• Trustee Selection — Who Should Hold Your Trust