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Can minor children be members of an LLC? If so, how should title be held?

Davis, CA |

Looking to form a California LLC as a family investment vehicle to hold rental real estate and publicly-traded securities. My children will contribute capital from their respective custodial brokerage accounts in the form of stock holdings -- in addition to cash capital contributions from myself and my spouse (our LLC interests to be held as sole and separate property in our individual names).

The purpose of the LLC is three-fold: liability protection on the rental side, pooling of funds to which to make investments and control of disposition of assets/distribution of cash (I being the sole managing member).

Attorney Answers 3

Posted

Minor children can not be members (owners) of an LLC, nor can minor children own title to real property. However, posed with the same question in my practice last year, there were other ways to achieve the same goal. See a good estate planner.

This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.

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Posted

I agree with the prior answer. Minor children lack legal capacity by virtue of the fact that they are minor children to own property in their name and to enter into legal contracts. In fact, if a minor child was the beneficiary of a life insurance policy, parcel of real property or an interest in an LLC, a person would have to petition the court to be appointed the guardian of the child to control those assets (under court supervision) until the child turned 18.

The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change.

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Posted

When I looked into this issue, I came up with a different answer than my colleagues.

One becomes a member of an LLC by entering into the operating agreement. I found nothing in the CA Corporations Code that precludes a minor being a member. Furthermore, minors can enter into agreements - BUT those agreements are subject to being disaffirmed (rejected) by the minor (please see post at the link below).

Accordingly, I found no reason why a minor cannot become a member of an LLC, though the possibility of disaffirmance could make it risky for the other members and for the LLC to have an minor member.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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