Can a trust own a business? Yes, it can. But most states require a DBA – a "doing business as" certificate – if your business uses any name other than your own or yours and your partners' combined. Your living trust will also need a name. Its name won't be a DBA because your trust isn't a business, but you can use a DBA for any businesses the trust owns if you're the trustee.
The same rule may not apply for irrevocable living trusts because you can’t control what the trust does. The trustee must operate independently from the grantor with this type of trust. It's one of its main disadvantages. You can’t dictate how to register the trust’s business.
Choosing a Trust Name
You and your living trust are two separate legal entities, so the trust must have a name of its own. But you can still act as trustee and control the trust as long as it's revocable.
Theoretically, you can name it anything, but attorneys recommend something along the lines of "The Your Name Revocable Trust." Banks and investment firms will be more confident and cooperative about transferring assets into the trust's ownership if the name is the same. If you change your name after you marry, for example, it's a good idea to change the trust name, too, if you change your name after you marry. This makes it clear that you're the person who created it.
Do You Need a DBA Registration?
A DBA registration helps consumers track down the owners of a business if they need to. You don't need a DBA if you do business under your own name, as some self-employed individuals do. You still may not have to register even if you do have a separate business name. It depends on your state and your business structure.
You may have to transfer a fictitious business name in California if you create a trust. You may also have to learn how to set up a DBA in Florida in these circumstances.
Suppose you own a sole proprietorship with your last name in the title, such as Smith Plumbing or Walpole Party Planning. You don’t need a DBA in this case, but you would require one if your business has its own unique name, such as 24-Hour Party Planning.
When a Trust Owns a Business
A living trust can legally take ownership of a business and also of its DBA. With a sole proprietorship, you would transfer any assets and accounts the business owns into the name of the trust, and also place the DBA in the trust's name. If you're trustee, you could then continue to run your business as you always have if you're the trustee, which is often the case with revocable trusts. You may also be able to transfer your ownership share of a partnership or a corporation into the trust's control.
The trustee will be in charge of the business if you form an irrevocable trust. You will no longer control its operations.
Factors to Consider
As trustee of a revocable trust, you can change your business name and refile a DBA on behalf of a sole proprietorship the trust owns. You can also file if you set up a new business or a subsidiary using trust assets. You may need the consent of your fellow owners to decide on a business name or to make any changes to the name if the business is a partnership, a limited liability company or a privately held corporation.
All these issues will be left up to the trustee if the trust in question is irrevocable. You can't participate or interfere in how the businesses within the trust are run.
A Durham, NC resident, Fraser has written about law, starting a business, balancing your budget and fighting evictions, among other legal and financial topics.