Is it Appropriate to Divide a Single LLC into Multiple LLCs and Establish a Trust for Ownership in Oklahoma?

Question from Bobby, Is it Appropriate to Divide a Single LLC into Multiple LLCs and Establish a Trust for Ownership in Oklahoma?

Answer from AI:

The structure you’re considering, where multiple LLCs are owned by a trust, is a common strategy used by business owners to limit liability and manage different aspects of a business. However, whether this structure is appropriate for your situation depends on various factors, including your business goals, tax implications, and the complexity of managing multiple entities.

Benefits and Considerations of Multiple LLCs

The primary benefit of having multiple LLCs is the separation of liability. If one LLC faces a lawsuit or bankruptcy, the assets and operations of the other LLCs are generally protected. However, there are also considerations:

• Increased complexity: Each LLC must maintain separate records, bank accounts, and tax filings.
• Cost: There may be additional costs associated with forming and maintaining multiple LLCs, such as filing fees and annual reports.
• Tax implications: Depending on how each LLC is taxed, this structure could have different tax consequences. Consult with a tax professional to understand these implications.

Establishing a Trust to Own the LLCs

A trust can provide additional asset protection and estate planning benefits. However, establishing a trust involves legal complexities and should be done with the assistance of a legal professional.

Steps to Establish Multiple LLCs and a Trust

1. Consult with a legal professional: This is a complex process with potential legal and tax implications. It’s important to get personalized advice.
2. Form the new LLCs: This involves filing articles of organization with the Oklahoma Secretary of State and paying the associated fees. Each LLC will need its own operating agreement.
3. Transfer assets: If you’re moving assets from LLC 1 to the new LLCs, this needs to be done properly to avoid potential tax consequences.
4. Establish the trust: A legal professional can help you create a trust and transfer ownership of the LLCs to the trust.

Partnership Ownership

The 49% and 51% ownership split can be maintained in this structure. Each LLC’s operating agreement can specify the ownership percentages and how profits and losses are allocated.

This is a general overview and not legal advice. It’s important to consult with a legal professional to understand the potential legal and tax implications of this structure. You can find more information about forming an LLC in Oklahoma on the Oklahoma Secretary of State’s website.