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Membership Transfer

Oftentimes an investor needs to change the entity that invested in the SPV. For example, an investor might use an LLC to make an investment and then years later set up a trust that will hold all of the investor’s assets, including the investment they made into the SPV. The investor will ask the Organizer to “transfer” their SPV membership interest from the LLC to their new Trust. Membership transfers require legal documentation and cap table updates. Be aware that a membership transfer is considered a taxable event so a tax return and K1s will be needed. The definition of a membership transfer is when an investor transfers their membership interest from one entity they control to another entity they control. A Membership Transfer is NOT a Membership Sale. Other common situations that warrant a membership transfer are divorce and death.

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