Funding your entity
Formation papers do not move assets by themselves — how to title property, assign interests, and keep the inventory honest.
Key facts
- Formation does not transfer assets into an LLC; use the documents, approvals, and records required for each asset.
- Real estate usually needs a new deed; brokerage and bank accounts need retitling; business interests need assignments.
- If a trust should own or control an LLC interest, review the operating agreement and state law; an assignment may transfer only economic rights without member or management rights.
Why funding matters
Once formation becomes effective under state law, an LLC or corporation becomes a separate legal entity. Formation does not automatically transfer property or business interests into it; each transfer requires the applicable documents, approvals, and record updates.
The same lesson applies to a trust: it governs property transferred to it or otherwise covered by its terms; property left outside may still require probate or another transfer mechanism.
Practical steps
List every asset that should sit in the entity. For each one, complete the instrument your state and custodian require (deed, assignment of membership interest, account retitle form). Update Elephant's asset inventory so owner fields match reality. Keep evidence of the transfer in the vault next to the formation docs.
Tax basis, lender due-on-sale clauses, and securities rules can apply. Use a real estate attorney, CPA, or corporate counsel for the actual transfer — this guide is orientation only.
References
- IRS — Limited Liability Company (LLC)
- Consumer Financial Protection Bureau — Mortgage closing and transfer by deed
- Delaware Code, Title 6, §§ 18-702 and 18-704 — Assignment and member admission
- Delaware Code, Title 6, § 18-201 — LLC formation and separate entity
- Delaware Code, Title 6, § 18-303 — Member and manager liability
- U.S. Code — 12 U.S.C. § 1701j-3 (Due-on-sale clauses)
- IRS Publication 551 — Basis of Assets
- SEC Investor Bulletin — Private placements under Regulation D
This guide is educational only and is not legal, tax, or investment advice. Laws vary by state and change over time; confirm current figures with the linked primary sources or a licensed professional in your state.
Related guides
Entity formation checklist
The practical sequence from name clearance through bank account — the same steps Elephant tracks in the entity checklist.
Holding company vs operating company
Why families often separate ownership (holdco) from day-to-day business risk (opco) — and how that maps to Elephant's entity registry.
Revocable Living Trust
How a living trust can avoid probate, what it doesn't do by itself, and why proper funding matters.
Put it into practice
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