You can form an Employee Ownership Trust in any US state. Oregon and Delaware are commonly recommended because their trust laws support perpetual (indefinite) trusts and the flexibility to amend them. The trust can be sited in a different state from where the business operates, so a company in a state that restricts perpetual trusts can still form its trust elsewhere.
An Employee Ownership Trust (EOT) can be formed in any US state. Oregon and Delaware are frequently recommended because their trust statutes support two features that matter for an EOT:
- Perpetuity — the trust can be set up to last indefinitely, which fits the goal of holding the company in trust for employees over the long term. (A handful of other states, such as South Dakota, Wyoming, and New Hampshire, also allow non-charitable purpose trusts in perpetuity.)
- Amendability — the trust terms can be amended as the company's needs evolve.
Where the trust is sited can be separate from where the business operates. The trust does not have to be formed in the state where the company runs day to day. That matters in states that still apply the Rule Against Perpetuities or otherwise restrict perpetual trusts: the business can keep operating where it is and site the trust in a state, such as Oregon or Delaware, whose law supports an indefinite purpose trust.
State trust law is technical and still evolving for EOTs, so the right jurisdiction is a fact-specific choice. This is general education, not legal advice; confirm the right state with an attorney experienced in employee-ownership transitions before formation.