How to Transfer an LLC Upon the Death of the Owner

By Robin Elizabeth Margolis

If you are running a single-member limited liability company -- a one member LLC -- you may need to insert a provision in your existing operating agreement that will insure a smooth transfer of ownership to another person or organization after your death. If you die and there is no provision within your single-member LLC's operating agreement for the transfer of your ownership to someone else, your LLC can become an asset of your estate. As such, it may encounter tax and probate problems. Your LLC may be divided among family members, dissolved or sold off to people you did not choose, depending on the laws of the state in which your estate is probated.

Step 1

Make a list of people and organizations, one of whom might be a suitable new sole owner of your LLC after you pass away.

Step 2

Call the people and organizations on your list and ask if they are willing to accept and run your LLC or dispose of it after your death.

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Step 3

Visit your state government's tax division website and look for booklets and other information on your state's rules regarding the transfer of an LLC after its owner's death. Check the federal Internal Revenue Service website to see if there are any recent changes in its rules that affect such transfers.

Step 4

Contact your state Secretary of State's office for a copy of the forms you will need to file an amendment to your original operating agreement, the address where you will need to file the amendment and the amount of the filing fee.

Step 5

Redraft or create a "Transfer of Ownership" article for the operating agreement. Name the new sole member who will take over the LLC after your death. Identify a second sole member in case the person you designate as the new sole owner is unable to accept the LLC transfer after your death due to disability, death or other problems. Add or revise language providing for the dissolution of your LLC if none of the people or organizations you designate can accept the LLC transfer after your death.

Step 6

File the amendment to your LLC operating agreement with your state's designated office.

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References

Resources

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