LLC How to pass upon death?

Question

I am sole member of LLC how do I leave this to my children? I have an operating agreement but does not mention what happens if a meme we dies. Do I add them on the operating agreement  as members and pass it to them that way? Or a revocable trust? Or both?

Sean Morrison · Answer

Having a trust is the best bet as you can put the membership interest in the trust's name and avoid probate. Your attorney can also help revise your operating agreement to better handle multiple members. It may also be worth considering a buy-sell agreement with your children in mind. That could help in disputes where some children want to continue the business, and some want out. It'll outline how to handle those situations. You can even combine that with life insurance policies held by the company to facilitate buy-outs.

Lance Lvovsky · Answer

@Lindel Turner

What does your Will or Trust say? Ideally you would transfer interest into your Revocable Trust to avoid probate and the expense that comes with that. Trust should dictate what happens to your membership interest in absence of any terms in the LLC operating agreement.

Zachary Paschke · Answer

Always consider life insurance policies with living benefits to help cover the event a partner becomes critically, chronic or terminally ill.

Scott Smith · Answer

@Lindell, the strategy to use a Living Trust as the beneficiary of the LLC or trust holding the asset helps to transfer the assets.  You can check out the estate planning tools that can be used to improve your asset protection started with your LLC in this article.

Lindel Turner · Answer

@Sean Morrison

Thank you

Lindel Turner · Answer

@Ashish Acharya

Thank you

Christina I. · Answer

@Lindel Turner

You can put the trust on the membership benefit of the LLC. By putting the LLC in a trust your heirs can avoid probate. I’m in the process of setting of this structure myself.

Nik S. · Answer

@Lindel Turner

Meet with an atty. If you don’t have a will and or trust have it set up. In simple terms, your Atty will add language about transferring the entity’s membership interest to your desired party.

Daniel Dietz · Answer

@Ashish Acharya don't the Membership Certificates have an area on the back to designate that like say an investment account or the like? Maybe I am remembering wrong? It's happened before :-)

Dan Dietz

Ashish Acharya · Answer

The LLC interest will be probated to your heirs in court if you don't have trust. LLC operating agreement cannot dictate what happens to your interest when you die in a sense who gets the property.

LLC operating agreement can have a provision that says if you die, the entity dissolves. Attorney should answer all these.

LLC How to pass upon death?

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