Owning a business makes estate planning more important—and more complicated.
For many business owners, the business is one of their largest assets. But it is also different from a house, bank account, or investment account.
A business interest may come with:
voting rights;
management authority;
restrictions on transfer;
obligations to other owners;
buyout provisions;
tax elections;
licenses; and
employees, customers, and contracts that depend on continued operation.
A good estate plan therefore needs to answer more than “Who inherits my business?”
It should also address:
Who can act if I become incapacitated?
Who controls the business after my death?
Can my trust legally own the interest?
Does the operating agreement restrict transfers?
Should my heirs receive ownership, cash, or both?
Will the business continue, be sold, or be bought out by the other owners?
The estate plan should coordinate with those answers rather than accidentally contradict them.
What Happens to a Utah LLC Interest When an Owner Dies?
Utah reorganized its business-entity statutes effective October 1, 2026. The Utah Revised Uniform Limited Liability Company Act is now found in Utah Code Title 16, Chapter 20.
Under current Utah law, an individual's death generally causes the individual to be dissociated as a member of an LLC. Utah Code § 16-20-602.
The deceased member's legal representative receives certain statutory rights for purposes of administering the estate, but death does not automatically give an heir or transferee all of the deceased owner's management rights. Utah Code §§ 16-20-502 and 16-20-504 distinguish between a transferable economic interest and the broader rights of a member.
That distinction matters.
Someone may inherit the economic benefit of an LLC interest without automatically receiving the right to:
vote;
participate in management;
inspect all company records; or
make business decisions.
The operating agreement can significantly affect the result.
The Operating Agreement Matters
Before transferring an LLC interest into a trust—or designing what happens to it at death—review the operating agreement.
The agreement may address:
whether an interest can be transferred to a revocable trust;
whether the trustee becomes a member or only a transferee;
what happens when an owner dies;
whether other members have purchase rights;
whether consent is required for a transfer;
how a successor owner is admitted;
valuation procedures; and
whether death triggers a mandatory or optional buyout.
Utah law specifically recognizes the importance of the operating agreement in governing the relationship among the LLC, members, and transferees.
Do not assume that signing an assignment to your trust automatically overrides the company's existing rules.
Can a Revocable Trust Own an LLC Interest?
Often, yes.
A revocable living trust can be an effective way to hold a business interest as part of an estate plan.
But the transfer needs to be coordinated with:
the operating agreement;
company records;
applicable tax rules;
any transfer restrictions; and
the desired management structure.
For a simple single-member LLC, transferring the ownership interest to a revocable trust may be relatively straightforward.
For a multi-member business, it can be much more complicated.
Under Utah Code § 16-20-502, transfer of a transferable interest does not by itself give the transferee the right to participate in management.
So the question is not merely:
“Did I assign the LLC to my trust?”
It is also:
“What rights did the trust actually receive?”
Why Put a Business Interest in a Revocable Trust?
When appropriate, trust ownership can provide several estate-planning benefits.
Probate Avoidance
A business interest properly owned by a revocable trust generally does not need to pass through probate merely to establish who owns that trust asset after death.
The successor trustee can administer the interest according to the trust agreement, subject to the governing business documents.
Incapacity Planning
If the trust owns the business interest, the successor trustee may be able to act concerning that interest if the owner becomes incapacitated.
But the trustee can exercise only the rights the trust actually owns and that the governing business documents permit.
Trust ownership does not override an operating agreement or magically convert a transferee into a manager.
Continuing Trusts for Beneficiaries
The business interest does not necessarily need to be distributed outright after death.
The trust can continue holding the interest for a spouse, children, or other beneficiaries when that structure is appropriate.
That can be particularly useful when the beneficiaries should receive economic benefits from the business but should not personally control it.
A Power of Attorney Is Also Important
A revocable trust does not replace a financial power of attorney.
Business owners often need both.
A financial power of attorney can authorize an agent to act concerning business and financial matters that remain outside the trust.
Depending on the documents and applicable law, the agent may be authorized to:
exercise ownership rights;
execute documents;
deal with financial institutions;
manage contracts;
communicate with accountants and advisors; and
handle other financial matters during incapacity.
But a power of attorney does not override an operating agreement, shareholder agreement, partnership agreement, professional-licensing rule, or other restriction.
If the business agreement says only a manager or specified person can run the company, a general power of attorney does not necessarily change that rule.
Learn About Utah Financial Powers of Attorney
Incapacity Can Be More Disruptive Than Death
Many business owners plan for death but overlook incapacity.
Suppose you own and personally manage a company.
You suffer a serious accident and cannot make decisions for six months.
Questions immediately arise:
Who can access business accounts?
Who can approve major transactions?
Who votes the ownership interest?
Who signs contracts?
Who deals with employees?
Who can sell the company if necessary?
The answer should not depend on family members trying to reconstruct your intentions during a crisis.
Your estate plan, business governing documents, and succession plan should work together before incapacity occurs.
Estate Planning Is Not the Same as Business Succession Planning
These concepts overlap, but they are not identical.
Estate planning determines who owns and controls your property during incapacity and after death.
Business succession planning determines how the business itself continues.
For example, your trust may validly provide that your daughter inherits your company.
That does not answer:
whether she is qualified to operate it;
whether the other owners must accept her;
who manages it before she is ready;
whether employees will stay;
whether the company should instead be sold; or
how other children should be treated economically.
Your estate plan should support a real succession strategy rather than attempt to create one by itself.
Equal Inheritance Does Not Require Equal Business Ownership
This is one of the most important issues for family business owners.
Suppose you have three children.
One child has worked in the business for 15 years.
The other two have never been involved.
An estate plan that simply leaves:
“one-third of everything to each child”
may result in three equal owners.
That may be mathematically equal but operationally disastrous.
Alternatives can include:
leaving control of the business to the active child;
leaving other assets to the other children;
using life insurance to equalize inheritances;
giving one child voting ownership and others economic interests, if legally and structurally appropriate;
directing a sale and dividing the proceeds; or
holding the interest in trust under defined management rules.
Fairness and equal ownership are not always the same thing.
What If None of My Children Should Run the Business?
Then the estate plan should not pretend otherwise.
Possible strategies include:
selling the company during life;
authorizing a sale after death;
selling to employees or existing owners;
using a buy-sell arrangement;
retaining professional management while beneficiaries receive economic benefits; or
winding down the business if continuation does not make sense.
A forced family succession can destroy value when no family member actually wants or is qualified to operate the company.
Business Owners With Partners Need Additional Planning
If you share ownership with other people, your estate plan must be coordinated with the company's governing documents.
A surviving business partner may not want to become partners with your spouse or children.
Your family may not want to remain financially tied to your business partners.
A properly designed buy-sell arrangement can provide a predetermined mechanism for resolving that tension.
What Is a Buy-Sell Agreement?
A buy-sell agreement determines what happens to an owner's interest after specified events.
Those events may include:
death;
disability;
retirement;
voluntary departure;
divorce;
bankruptcy; or
another transfer event.
Depending on the structure, the agreement may give the remaining owners an option or obligation to purchase the departing owner's interest, or it may require the business itself to redeem the interest.
The agreement may also establish:
valuation procedures;
payment terms;
insurance requirements;
purchase priorities; and
restrictions on transfers to outsiders.
Because Legacy Peak focuses on estate planning, we coordinate the estate plan with an existing operating agreement or buy-sell agreement. If the business agreement itself needs substantial amendment or a new business agreement needs to be prepared, separate business counsel may be appropriate.
Life Insurance Can Fund a Business Buyout
Life insurance is commonly used to provide liquidity after an owner's death.
For example, insurance proceeds may help:
purchase a deceased owner's interest;
provide cash to the family;
replace income;
equalize inheritances;
pay estate expenses; or
prevent the company from having to borrow heavily to complete a buyout.
But the ownership of the policy and the structure of the purchase matter.
Business Owners Should Know About Connelly v. United States
In 2024, the United States Supreme Court addressed life-insurance-funded stock redemption planning in Connelly v. United States.
The Court held that a corporation's obligation to redeem a deceased shareholder's stock did not necessarily offset the value of life-insurance proceeds held by the corporation when valuing the corporation for federal estate-tax purposes.
The practical lesson is not that entity-owned life insurance is always wrong.
It is that a buy-sell arrangement should not be designed on the assumption that an entity redemption automatically neutralizes the insurance proceeds for estate-tax valuation.
For owners of valuable closely held businesses, the tax consequences of the insurance and redemption structure deserve separate review with appropriate tax advisors.
Does a Buy-Sell Agreement Establish the Value for Estate-Tax Purposes?
Not automatically.
The price used among the owners for a contractual buyout is not necessarily binding on the IRS for federal estate-tax valuation.
Valuation provisions should be designed with tax consequences in mind, particularly when the business represents a substantial part of the owner's estate.
This is another reason that estate planning, business agreements, valuation, insurance, and tax planning should be coordinated rather than handled independently.
S Corporations Require Special Attention
If your business is taxed as an S corporation, trust planning requires additional care.
Federal tax law restricts who may be an S corporation shareholder. Permitted shareholders generally include individuals, estates, and certain qualifying trusts.
A revocable grantor trust can generally qualify while the owner is alive because the owner is treated as the owner for federal income-tax purposes.
After the owner's death, however, different rules apply.
Certain trusts may qualify temporarily, while longer-term ownership may require the trust to qualify under rules applicable to structures such as a Qualified Subchapter S Trust (QSST) or Electing Small Business Trust (ESBT). Elections can matter.
That means an estate plan should not direct S corporation stock into a long-term beneficiary trust without considering whether the trust will remain an eligible shareholder.
The company's CPA or tax advisor should be involved when necessary.
What About a Sole Proprietorship?
A sole proprietorship is not a separate legal entity in the same way as an LLC or corporation.
That means the estate plan needs to address the underlying business assets themselves.
Those might include:
equipment;
contracts;
intellectual property;
receivables;
inventory;
business accounts;
real estate; and
goodwill.
If continued operation is important, forming an appropriate business entity may be worth discussing with business and tax counsel.
Estate planning can then be coordinated with that entity.
Professional Practices Need Special Care
Law firms, medical practices, dental practices, accounting firms, and other licensed businesses can be subject to ownership restrictions.
The fact that your trust can hold an ordinary investment asset does not necessarily mean the trust or every beneficiary can hold an unrestricted ownership interest in a professional entity.
Professional-licensing statutes, governing boards, and company documents may control who can own or manage the practice.
Those rules need to be reviewed before transferring the interest.
What Happens If I Own Business Real Estate?
Separate the business from the property it occupies.
For example, you may own:
ABC Plumbing, LLC
and separately own:
123 Main Street, LLC, which owns the building.
Those are two different estate-planning assets.
The operating business may eventually be sold to one person while the real estate remains in trust and is leased to the business.
Or both may be transferred together.
The estate plan should identify which entity owns what rather than treating “the business” as one undifferentiated asset.
Should the Trust Own the LLC or the LLC's Assets?
Usually, estate planning focuses on ownership of the LLC interest.
If an LLC already owns a rental property, for example, the property belongs to the LLC.
You ordinarily would not deed the LLC's real estate to your personal revocable trust simply because you are funding your estate plan.
Instead, you consider whether your ownership interest in the LLC should be held by or coordinated with the trust.
Changing the ownership of the LLC's actual property is a separate business transaction that can have different liability, tax, lender, and title consequences.
What Happens to Business Debt?
Transferring your ownership interest to a trust does not erase company debt or personal guarantees.
If you personally guaranteed a business loan, your death or incapacity may have consequences under the loan documents.
Business owners should maintain a list of:
loans;
lines of credit;
personal guarantees;
leases;
key contracts;
insurance policies; and
important professional contacts.
Your successor trustee or personal representative needs to know these obligations exist.
Asset Protection for Business Owners
Business owners often have greater exposure to liability than someone whose wealth consists primarily of retirement accounts and a home.
The first line of asset protection is usually good business structure and risk management:
appropriate business entities;
adequate insurance;
separation of business and personal finances;
compliance with company formalities; and
avoiding unnecessary personal guarantees.
A revocable living trust does not create asset protection from your own creditors merely because the trust owns the property.
Because you retain control over a revocable trust, the trust is primarily an estate-planning and management tool—not a shield from your own creditors.
Some business owners with substantial wealth or unusual liability exposure may consider advanced irrevocable planning.
Learn About Utah Asset Protection Trusts
Utah Asset Protection Trusts
Utah law allows qualifying self-settled spendthrift trusts under its asset-protection-trust statutes.
These trusts involve substantially different rules from a revocable living trust and require careful planning.
A Utah DAPT should not be viewed as a way to move assets away from existing creditors after a problem arises.
Timing, solvency, fraudulent-transfer rules, statutory exceptions, administration, and the particular assets all matter.
For the right client, however, advanced asset-protection planning may be worth considering before a claim exists.
Learn About Utah Asset Protection Trusts
Estate-Tax Planning for Business Owners
A successful business can cause an estate to grow faster than expected.
The value of the company should therefore be considered when evaluating potential federal estate-tax exposure.
This is particularly important when:
the company has appreciated substantially;
the owner expects continued growth;
a sale is likely;
life-insurance proceeds are substantial;
ownership is concentrated in one family; or
advanced gifting is being considered.
Estate-tax planning should be done before a transaction or death forces the issue.
Some strategies may involve lifetime gifts, irrevocable trusts, marital planning, charitable planning, or other specialized structures.
Learn About Advanced Estate Planning
Do Not Give Away Business Interests Without Tax Advice
Business interests can have substantial unrealized appreciation.
A lifetime gift and an inheritance at death can have very different income-tax consequences.
Under federal law, property acquired from a decedent can qualify for a basis adjustment under Internal Revenue Code § 1014 when the statutory requirements are satisfied.
Lifetime gifts generally follow different basis rules.
That does not mean retaining a business until death is always preferable.
It means that transfer-tax planning and income-tax planning need to be considered together before making a major lifetime transfer.
Keep an Updated Business Information File
One of the simplest things a business owner can do is leave organized information for the people who will eventually step in.
The file should identify:
business entities;
ownership percentages;
operating agreements and shareholder agreements;
accountants;
insurance professionals;
key employees;
banking relationships;
major loans;
personal guarantees;
payroll providers;
important contracts;
tax returns;
licenses; and
where the original company records are maintained.
Do not put passwords directly into a will or other document likely to become public.
Instead, maintain an appropriate secure access system and make sure the right fiduciary knows how to locate it.
Coordinate the Estate Plan With the Business Documents
A business owner's estate plan should not be drafted in isolation.
At minimum, compare the estate plan with:
The operating agreement or shareholder agreement
Does it restrict transfers to the trust?
Does it address death?
Does it address incapacity?
Does it contain a buy-sell provision?
The trust
Can the trustee hold or sell the interest?
Who ultimately benefits from it?
Should one child receive control while others receive other property?
The power of attorney
Does the agent have appropriate business-related authority?
Beneficiary designations and insurance
Are insurance proceeds supposed to support the family, fund a buyout, equalize inheritances, or accomplish another purpose?
The succession plan
Who is actually expected to operate the company?
When these documents point in different directions, the family inherits the conflict.
A Practical Example
Assume a business owner has a company worth approximately $2 million and three children.
One daughter works in the business and is expected to take over.
The other two children have careers elsewhere.
The owner's estate also includes a home, investments, and life insurance.
A simple estate plan that divides everything equally might leave each child owning one-third of the company.
That may be exactly what the owner does not want.
A more deliberate plan might provide that:
The active daughter receives or purchases the business interest.
The other children receive a greater share of other assets or insurance proceeds.
The successor trustee has authority to hold the business temporarily during the transition.
The company documents establish whether and how the ownership transfer occurs.
The estate plan addresses what happens if the daughter cannot or does not want to take over.
The exact economics will vary.
The important point is that the estate plan should solve the business owner's actual succession problem rather than mechanically dividing every asset into equal pieces.
Frequently Asked Questions
Should my LLC be owned by my revocable trust?
Often, but not automatically.
Trust ownership can provide useful probate and incapacity-planning benefits. The operating agreement, tax treatment, transfer restrictions, and management structure should be reviewed first.
Does assigning my LLC interest to my trust make the trust a full member?
Not necessarily.
Under current Utah law, transferring a transferable interest does not by itself give the transferee all management rights. The operating agreement and statutory rules concerning membership still matter.
Did Utah change its LLC statute in 2026?
Yes.
Effective October 1, 2026, Utah's Revised Uniform Limited Liability Company Act was renumbered into Title 16, Chapter 20.
Older documents and articles may still cite the former Title 48 numbering.
Does a revocable trust protect my business from creditors?
No.
A revocable trust is generally not an asset-protection device against the settlor's own creditors.
Its principal purposes are estate planning, asset management, probate avoidance for appropriately funded assets, and distribution after death.
Can my successor trustee run my business if I become incapacitated?
Possibly, but only to the extent the trust owns the relevant rights and the business documents permit the trustee to exercise them.
An operating agreement may distinguish between economic ownership and management authority.
Do I need both a trust and a power of attorney?
Often, yes.
A successor trustee manages trust property.
An agent under a power of attorney can address appropriate financial matters outside the trust.
For a business owner, the two documents should be coordinated.
Can my trust own S corporation stock?
Certain trusts may qualify as S corporation shareholders, but the federal rules are technical.
A revocable grantor trust can generally qualify during the owner's lifetime. Different requirements can apply after death, including potential QSST or ESBT rules and elections.
Should I divide my business equally among my children?
Not necessarily.
Equal economic inheritance and equal business control are different questions.
If only one child is involved in the business, dividing management equally can create unnecessary conflict.
Do I need a buy-sell agreement?
If you own a business with other people, a buy-sell arrangement is often worth considering.
It can establish what happens to an ownership interest after death, disability, or another triggering event.
Because Legacy Peak focuses on estate planning, substantial drafting or amendment of business agreements may require separate business counsel.
Can life insurance help with business succession?
Yes.
Insurance can provide liquidity for a buyout, family support, estate expenses, or inheritance equalization.
The ownership and beneficiary structure should be coordinated with the succession and tax plan.
Does a buy-sell price automatically control the value of the business for estate taxes?
No.
Federal estate-tax valuation follows federal tax law. The Supreme Court's 2024 Connelly decision also demonstrates that life-insurance-funded entity redemptions can create valuation consequences that deserve careful planning.
Estate Planning Should Protect the Family and the Business
A business owner's estate plan has two jobs.
It must protect the owner's family.
And it must prevent the owner's death or incapacity from creating an avoidable crisis inside the business.
That requires more than simply putting the words “my LLC goes to my children” into a trust.
The plan should address:
ownership,
management,
incapacity,
transfer restrictions,
succession,
tax consequences,
and
how the business fits with the rest of the family's inheritance.
Legacy Peak Estate Planning Law focuses on the estate-planning side of that process. We can coordinate your trust, will, powers of attorney, inheritance provisions, and advanced planning with your existing business structure.
When business agreements or tax work require separate counsel or advisors, we can identify the issue so the appropriate professionals can address it.
Will-Based Estate Plan
One person: $1,000
Two people: $1,500
Trust-Based Estate Plan
One person: Starting at $1,500
Two people: Starting at $2,000