Winston Salem, NC asked in Estate Planning and Business Law for North Carolina

Q: If I create a LLC and make a single Living Trust the only member would that be a disregarded entity?


If I create a LLC and make a single Living Trust the only member would that be a disregarded entity?

What filing status can be declared (if any) to not make it disregarded entity?

Or, do I need to just create two Living Trusts so ensure it is not a disregarded entity?

This is both from a legal (so the LLC is legit and retains limited liability benefits etc) AND a tax perspective.


Related Topics:
1 Lawyer Answer
Nathan Hull
Nathan Hull
  • Charlotte, NC
  • Licensed in North Carolina

A: My guess is that this arrangement is unnecessarily complex and you should discuss with a competent attorney in your state what your goals are with this arrangement. Generally LLCs are disregarded entities for taxes. You could elect to have the LLC taxed as a C-Corp if you wanted corporate taxation. Trusts can be drafted to be disregarded or to be their own taxable entity. Trust tax brackets and corporate tax brackets are different from individual tax brackets so make sure what you are doing is actually a net benefit to you. You may be setting your self up for double taxation.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.