What Happens When an LLC Member Dies? (In-Depth Guide)

Jon Morgan
Published by Jon Morgan | Co-Founder & Chief Editor
Last updated: September 27, 2023
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Businesses are not exempt from unlucky or unanticipated circumstances. Losing a loved one brings shock, amplified by their business's fate.

We've done extensive research and offered our own experiences as legal consultants and attorneys with more than 10 years of experience in the area to assist you grasp the nuances of the procedure. While an LLC will go through probate, but it will be a very short process, although there are variables.

Quick Summary

  • When a limited liability company (LLC) member dies, the LLC will continue to operate as long as there are remaining members. 
  • The deceased member's representative must file documents with the state to change the membership records of the LLC.
  • On the other hand, if the deceased member was the only person and owner of the LLC and had no significant family members, the LLC could be dissolved.

What Happens When an LLC Member Passes Away

A man checking a document showing a deceased member's interest

If the limited liability company (LLC) is operating with two or more members, then under state law, the interest of a deceased member will be purchased by the remaining members.

If only two LLC members are left alive, they must buy the deceased member's entire limited liability company interest. The LLC's operating agreement may have different terms.

A member's interest in a limited liability company may also pass to their heirs, legatees, or estate by the operating agreement and applicable law of intestate succession.

How Do You Transfer an LLC After Death?

Transferring an LLC after a member's death requires reaching the unanimous consent of all other LLC members and following the provision indicated in the operating agreement.

To make it clear for the remaining members how to proceed if operating under a written operating agreement, you should include explicit language about the transfer of financial interests or membership following death, disability, or incapacity.

State law will dictate how the deceased member's interest is transferred when operating without a written operating agreement.

The operating agreement should include the member's operating responsibilities to keep the business running and their rights in the context of passing away.

An operating agreement including terms for transferring interest/membership upon death will make a smooth transition and avoid confusion.

If operating without an operating agreement and the member's operating responsibilities and rights go unaddressed, then chances are we'll be operating under state law.

How Do You Inherit an LLC?

Meeting discussion about paperworks

You can inherit an LLC if your deceased loved one was operating as a sole proprietor, then what you're inheriting is that business itself.

However, if they were operating as something else, like an LLC or partnership, then what's getting passed on to you is the LLC ownership of the operating company.

In that case, you'll need to consult the operating agreement of the LLC.

Does it state the formula for how the interest of a deceased member is supposed to pass?

If not, then the default method of distributing ownership is according to state law.

Similar Article: How to Remove a Member From Your LLC

Can You Inherit a Single-Member LLC?

Man thinking while reading documents on clipboard

Whether you can inherit a sole-member LLC depends on whether you can inherit a member's interest in an LLC when there is no will.

It also depends on the operating agreement of the single-member LLC (SMLLC) since it can be designed to prevent member interest inheritance.

The member's next of kin may not inherit the member's interest if they are not listed as a member or as a member's beneficiary in the LLC operating agreement.

The member should consider adding these beneficiaries to the LLC and creating an estate plan that identifies their desire for future beneficiaries to receive members' membership interest.

Who Inherits an LLC When There Is No Will?

If there is no will, the deceased member's interest passes to the deceased member's heirs.

However, if there is no will specifying how an inheritance should be distributed among potential beneficiaries, investors can control how assets are divided up in the LLC.

To avoid this situation where they have to relinquish the inherited member's interest in the LLC, the member should draft a will.

Though a member may want to keep their assets private, their death can be announced through public records.

Does an LLC Go Through Probate?

Passing someone a file

An LLC will go through probate, but it will be a very short process, although there are variables. Suppose a member passes away with no designated beneficiary. In that case, the member will leave behind a probated estate.

Their member ownership interest in the LLC will be transferred down to others using the laws of intestacy (the state's rules for passing property when someone dies without a valid will.)

If a member does leave a will, the member may clearly state how they would like their member ownership interest to be passed on.

This can avoid probate. It may also prevent any member ownership interest from passing down to the member's next of kin.

It states that they are not heirs to the member's property or member's member ownership interest.


Does LLC Have a Right to Survivorship?

An LLC does not have the right to survivorship. However, it can be provided in the operating agreement or if all members agree to it.

Who Are the Beneficiaries of an LLC?

The primary beneficiaries of an LLC are its members, although this can vary. Beneficiaries might not be members themselves, often being spouses, children, or other designees, including charities, friends, and family.

Does the Death of a Member Trigger Dissolution of an LLC?

The death of a member does not automatically trigger the dissolution of an LLC. The LLC operating agreement typically outlines procedures for such situations. The surviving members usually have the right to buy the deceased's LLC and membership interests.

What Happens to an LLC after a Member's Death?

The actions outlined above are carried out upon a member's death, at which point they become "dissociated". Some stages may vary depending on the state in which an LLC was established.

Although it's not something people frequently consider when starting a business, it's nevertheless important to be aware of these processes.

Because of this, talking to legal professionals who can help you get ready for a variety of business issues could be helpful.




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