An LLC can survive beyond the death of its owner. This is determined by the LLC’s operating agreement. When creating a one member LLC, you may need to insert a provision in your operating agreement insuring a smooth transfer of ownership to another person or organization after the member’s death.
In the case where there is no provision in the operating agreement, the death should be treated as a transfer of interests between the deceased member and that member’s rightful heir; it becomes an asset of your estate. However, this may cause tax and probate problems because the LLC may be divided among family members, dissolved, or sold to people you did not choose.
The member may give his ownership interest in the LLC to another person in his will. Unless the operating agreement has a provision that prohibits or conditions this, then the transfer is legitimate. Even if the LLC is not mentioned in the will, the next of kin will automatically inherit the deceased’s member ownership interest unless the operating agreement prohibits it. The operating agreement can also have a provision stating that the LLC dies with the single member.
Not sure if your operating agreement has the correct provisions to protect your company? Schedule a consultation today. We’re happy to help you. info@epgdlaw.com / (786) 837-6787
