A holding company is a business entity that owns a controlling interest in other companies. It typically doesn’t manufacture anything, sell any products or services, or conduct any other business operations. Rather, holding companies hold the controlling stock in other companies³.
A trust is a legally recognized relationship in which the assets of one party are held under state law on behalf of another party. Trusts are often used in estate planning as a way to bypass the often costly and time-consuming probate process².
It is possible for a trust to own a holding company that in turn owns all of their LLCs. The benefit of forming a trust-owned LLC is that it combines the limited liability protections of the LLC structure with the estate-planning benefits of a trust (i.e. avoiding probate). This may be helpful when it comes to protecting certain assets within a trust².
Source:
(1) Holding Company: What It Is, Advantages and Disadvantages – Investopedia. https://www.investopedia.com/terms/h/holdingcompany.asp.
(2) Trust-Owned LLCs, Explained – Northwest Registered Agent. https://www.northwestregisteredagent.com/llc/trust-owned.
(3) Trust > holding company > LLCs? : r/personalfinance – Reddit. https://www.reddit.com/r/personalfinance/comments/11lk2t4/trust_holding_company_llcs/.
(4) What Is the Difference Between a Holding Company & a Trust?. https://www.sapling.com/8356903/difference-holding-company-trust.
(5) Can a revocable trust be a sole member of an LLC? | LegalZoom. https://www.legalzoom.com/articles/can-a-revocable-trust-be-a-sole-member-of-an-llc.
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