A living trust settles who owns the company. It does not put anyone on the board, in an office, or on the bank account. Those seats are filled through the company's own records, one step at a time.
The trust decides who owns the business. The company's records decide who can sign for it, and neither one updates the other.
In many family corporations the owner holds every role at once: sole director, president, chief financial officer, secretary, and the only signer at the bank. California allows one person to hold all of those offices. The shares sit in a revocable living trust, which is the right place for them.
When that owner dies or can no longer act, the successor trustee steps in under the trust and holds the shares. That answers who owns the company. It does not give the trustee a seat on the board, an office, or the power to sign payroll, renew a lease or move money in the company's name. In a California corporation, shareholders elect directors, and the board chooses officers, who serve at the pleasure of the board (Corporations Code section 312). Authority runs down that chain, and someone has to walk it.
After a death. The owner's board seat becomes vacant. Shareholders may fill a vacancy at any time, and when they act by written consent, a majority of the outstanding shares is enough (section 305). If the trust holds every share, the trustee signs one consent electing a director, the new board appoints officers, and the board adopts a new banking resolution. That is a few documents, provided the trustee knows they are needed and can find the minute book.
After an incapacity. This is harder, because nothing becomes vacant. The owner is still a director and still an officer until someone acts. The successor trustee first takes office under the trust's own incapacity terms, which often call for written physician certification. Then, voting the shares, the trustee can remove directors without cause by approval of the outstanding shares (section 303) and elect replacements. Electing directors by written consent generally requires every share entitled to vote (section 603); otherwise the shareholders need a meeting, noticed at least 10 days ahead (section 601). When the shares are spread across several family members, asking them to vote a living parent off the board of the company that parent built tends to slow everything down.
A power of attorney does not close the gap. An agent acts for the owner personally. That does not make the agent a director or an officer, and the company's bank answers to the signers named in the company's own resolution.
LLCs. The operating agreement controls. If the owner is the sole manager, the agreement should say who succeeds. If the membership interest was assigned into the trust, confirm the trust was admitted as a member. Under California's LLC statute, a transferee who is not admitted holds the economic rights but has no right to take part in management.
The preparation is ordinary corporate housekeeping, done while the owner can still sign. Appoint a second officer now, such as a secretary or chief financial officer the owner trusts, so someone already holds signature authority on the day it is needed. Add that person as an authorized signer at the bank, with whatever limits suit the business. In an LLC, name a successor manager in the operating agreement and state when that person takes over.
Then make the trust and the company describe the same event. If the trust defines incapacity one way and the company documents are silent, the trustee can hold the shares for weeks while nobody holds the checkbook. A shareholders' agreement or operating agreement can borrow the trust's definition, so that one physician letter triggers both. Finally, give the successor trustee a written page: where the minute book is, who the accountant is, which payroll runs on which day.
Estate Planning for a Family Business means reading the trust and the company records as one set. The trust names who will own the business. The bylaws, minutes and bank resolution decide whether anyone can run it the following morning.
General information about California law, not legal advice, and no attorney-client relationship is created. How these rules apply depends on your entity, your articles, bylaws or operating agreement, and the terms of your trust.
Bring the trust, the bylaws or operating agreement, and the minute book. We will trace who holds authority today, and who would hold it if you could not.
